Moneymakeover On the right path, looking for suggestions

[Bearsandbulls]

Your age: 38
Your spouse's age: 40
Number and age of children: 3 children. 6,4 and 1


Income and expenditure,
Annual gross income from employment or profession: €91,000 plus €20k bonus
Annual gross income of spouse/partner: €30,000 (Works reduced hours)
Monthly take-home pay: Me €3,900 (after maxing pension contributions)
Spouse €2,000
Other income: We have small company which earns approx €25k per year. Spouse takes 50% of end of year profit as salary payment in December and pays other 50% into new pension scheme

Type of employment: I work in private sector, Spouse works in public sector

Saving on majority of months. Exceptions would be Summer holiday, Christmas etc.


Summary of Assets and Liabilities
Family home value: Estimated €350k
Mortgage on family home: None - Fortunate to have been able to buy outright

Cash: €75,000 (emergency fund of ~€25k, remaining €50k waiting to move into equities if there is a substantial drop in markets)

Pensions: I have a DC pot of €255k. Recently moved approx 60% to cash and have remainder in low risk equities.
Spouse recently set up AVC scheme and private company schemes - approx €30k combined - Invested 100% in equities. Max's AVC contributions at end of year from savings
Spouse has a very modest Post 2013 scheme. Joined in 2016, took extended maternity leave for all children and now on reduced hours. Wont be relying on this scheme to get us by!

I acknowledge that my pension should not be so heavily weighted in cash. I just feel equities are extremely overvalued now. I intend putting cash holdings both inside and outside of my pension into equities if a crash happens.

Crypto: €10k
Degiro: €45k invested in commodities


Total net assets: €765,000


Family home mortgage information
N/A

Other borrowings – car loans/personal loans etc
No borrowings

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? N/A

Pension information
Value of pension fund: €285k between us plus spouse has Post 2013 public pension that will be of low value



Other information which might be relevant

Life insurance: I have life cover through my company scheme at 3 times salary.
No other insurance or income protection.

Live in a remote area in countryside. Happy with current house although we have intentions of buying a townhouse in local village closer to retirement. In no rush to do this, happy to wait and see what comes up as that is a long way away yet.

I have probably hit a ceiling in terms of salary. My workplace is close to home and very flexible. Moving roles for further career advancement is likely going to require a long commute due to the industry that I'm in. Happy to stay close to home and be able to partake in activities with kids etc.

My spouse is intending to go back to college for next 4 years on a part time basis. Cost of the course is €20k and will come from our cash savings. Not sure what the return will be like after the course but she is keen to do it. Happy wife, happy life.



What specific question do you have or what issues are of concern to you?

Goal would be to retire well in advance of 65. Enjoying life, Maxing AVCs and still saving money as a result of being mortgage free. Aware that our kids will become very expensive as they hit teens (and probably after!).

I am looking for advice in general. Would like to know what suggestions the knowledgeable folk here have to improve what we believe is a very comfortable situation already.

 

[Persia]

€50k waiting to move into equities if there is a substantial drop in markets)

Timing the market is generally not a good idea. There were dips during recent Iran war but equities/ETFs I have, seem to have recovered and despite Trump are powering ahead...for now at any rate.

Waiting for a crash could happen next month or in 5 years time. Who knows but you are losing money sitting in a bank.

 

[Khublei]

Agree with Persia. The drop was in March. Powering ahead now. Still better than cash though.

 

[aristotle]

There have been crashes coming since 2016 yet here we are in 2026, bumps along the way but markets still up.

At your age you should be 100% in equities and forget about it until maybe 7-8 years before retirement.

 

[Bearsandbulls]

thanks for the replies. Simple advice, stop complicating things and just keep going with equities

 

[misemoi]

What are your plans for college expenses if needed, or potentially funding a vehicle for someone eg doing an apprenticeship? A long way off but worth considering given that you mention you live rurally.

Not sure what the return will be like after the course but she is keen to do it

Happy to stay close to home and be able to partake in activities with kids etc.

Both points above tell a good story... you both see value beyond financial only. There is a reward and a cost to life satisfaction and it is good to understand this equation!

 

[Bearsandbulls]

What are your plans for college expenses if needed, or potentially funding a vehicle for someone eg doing an apprenticeship? A long way off but worth considering given that you mention you live rurally.

I dont have any plan devised as of yet, other than hopefully pay for them as they arise out of savings. Based on the advice I've been given here they will likely be paid for after selling some equities.

Circumstances can change but based on our current trajectory, I dont think we'll have difficulty paying for this. The cost will of course delay our own retirement plans.

 

[Sarenco]

In your shoes, I would invest your pension 100% in a global equity index fund. Today!

Trying to time the market is a mugs game and you are far too young to be holding so much cash.

I wouldn’t have an issue with holding your after-tax savings in cash but make sure anything over your emergency fund is in a decent fixed-term deposit.

Crypto and commodities? Well, that wouldn’t be my cup of tea but they are fairly modest holdings in the grand scheme of things.

Are there any improvements you could make to your home to make it more energy efficient? You might find that produces the best return on your after-tax savings.

Also, does your wife have any scope to purchase notional service? That could significantly bolster her pension.

 

[Bearsandbulls]

Are there any improvements you could make to your home to make it more energy efficient? You might find that produces the best return on your after-tax savings.

Also, does your wife have any scope to purchase notional service? That could significantly bolster her pension.

Thanks for your reply. Our house is relatively energy efficient even though its heated by kerosene. There are good levels of insulation there. While upgrading to a heat pump might be marginally more convenient, I dont see the payback to warrant the switchover. We already have solar PV and batteries installed so our electric bills are very low.

I will look into buying service for my wife. It hadn't even crossed my mind before, thank you

 

[CharlieMac]

Since your wife is in the post 2013 pension scheme buying notional service is not possible. Pension benefits accumulated under the post 2013 scheme are not linked so much to how many years of service you worked for but your earnings over the course of your career in that public service role.

There is something similar available called purchasing "referable amounts" or pension benefits. There is a lot of detail in the Key Post on the Single Pension Scheme and this section deals with purchasing referable amounts. It is considered smarter to simply build up an AVC fund and right before retirement either decide to use that fund to purchase all the defined benefit pension you are allowed to or else transfer it in to an ARF. An ARF can later be used to buy a (non-public sector) annuity and those rates become more favourable as you get older.

 

[Bronte]

Circumstances can change but based on our current trajectory, I dont think we'll have difficulty paying for this. The cost will of course delay our own retirement plans.

You'll be 50/52 & 55 for the college years. Your peak earning power is now. You cannot foretell the future. But you should plan for it. Another life insurance is in order in case you lose your job. Because it's really difficult to get life insurance as we age. Not sure about income protection, because they are notorious to get paid out on.

As regards your 765K assets.

House 350 + 75 cash + 255 pension + 30 pension + 10 + 45 + 45 = 765.

Discount house 350 + 255 pension + pension 30 = 635.

Cash is 75 + 10 + 45 = 130. - 20 college leaves 110. From this you have to fund college if that is the future.

Your wife's pension pot is very low. She needs to think about that. If she's upskilling to get a better job than college is a good idea. She's very dependent on your income. And on your income always being available.

What about the small business, would expanding that be a possibility for her?

 

[Bearsandbulls]

You'll be 50/52 & 55 for the college years. Your peak earning power is now. You cannot foretell the future. But you should plan for it. Another life insurance is in order in case you lose your job. Because it's really difficult to get life insurance as we age. Not sure about income protection, because they are notorious to get paid out on.

We will look at life insurance options and income protection. I tend to agree with you on the income protection difficulties, they are expensive and no guarantee they will deliver when needed.

Cash is 75 + 10 + 45 = 130. - 20 college leaves 110. From this you have to fund college if that is the future

This a snapshot of now i suppose. We are saving regularly and I would expect this figure to grow. I am intending placing this and future savings into equities based on advice here. Other than that I am not sure of how else we can fund/save college fees. It would seem counterintuitive to just set aside money in a bank account labeled college (not that you are suggesting this).

Your wife's pension pot is very low. She needs to think about that. If she's upskilling to get a better job than college is a good idea. She's very dependent on your income. And on your income always being available.

Your right and we have. We are addressing her small public sector pension by using the small company to build up a directors pension. The €30k pot has been funded over last 2 years. We are planning to maximise contributions to this in a tax efficient manner in the foreseeable future.

Her college course is her plan to upskill. Its in an area I know nothing about, hence I can't say if its going to be worthwhile. She believes it is and wants to do it, so that is good enough for me.

We are dependent on my income, however my wife has the option of going back on full hours if needed. Reduced her hours to make life with 3 young kids easier. It is a good option to have and hopefully wont be needed.

The small company is capped in terms of income. I am the primary worker in the company and haven't the time to attempt to grow further. Even if I was to quit my PAYE role, I don't believe I could ever match my current income through the company. It is a nice side earner which we are using to address my wife's low pension and take a modest amount from each year.

 

[Premos]

Spouse takes 50% of end of year profit as salary payment in December and pays other 50% into new pension scheme

If you are the primary worker in the company, I am surprised at this... If your wife is paid a salary, does she actually work in the company. The full amount seems to go to her. Is there a risk in terms of tax due and revenue?

 

[Bearsandbulls]

If you are the primary worker in the company, I am surprised at this... If your wife is paid a salary, does she actually work in the company. The full amount seems to go to her. Is there a risk in terms of tax due and revenue?

Yes she does work for the company and probably receives less than minimum wage for the time she puts in so there is no risk here from a revenue point of view. I put quite a bit of time into it and hence don't have time to grow further. Some might question why we bother with it for the return we see but I actually enjoy it. Not lucrative from a business point of view but very rewarding for a pastime.