Planning for the Future

CPM_81

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29
Age: 39
Spouse’s/Partner's age: 42

Annual gross income from employment or profession: €62,500
Annual gross income of spouse: €59,000

Monthly take-home pay: €7,010

Type of employment: Both private sector

In general are you:
(a) spending more than you earn, or
(b) saving? Saving, 1000 p/m jointly and 500 each separately

Rough estimate of value of home: 450k
Amount outstanding on your mortgage: 250k (1168 p/m - 27 yrs remaining)
What interest rate are you paying? 3% (2 years remaining on 5 yr fixed with BOI)

Other borrowings – car loans/personal loans etc:
Car loan – PCP
Repayments are €320 p/m. I am saving 500 p/m to pay off 11k balloon payment in June this year.

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 0 on both our cards

Savings and investments: 1,500 in joint savings - We recently depleted our joint savings after doing work to our garden & some home improvements. We had saved roughly 20k to do this work.
I have 6k in personal savings, this will be used to pay off my PCP car loan balloon payment in June. I will receive about 3.5k in April from annual work bonus. I will use this, plus what I have saved to pay off the car.

Spouse has 9k in personal savings. Will be used if he needs to change car, or for repairs etc. This can also be used as a buffer if anything unexpected happens in lieu of our joint savings being built up again.

Do you have a pension scheme?
Yes, work DC pension. My employer contributes 10%. At the moment, I contribute nothing. Current value 75k.
DB benefit pension from previous employer. I think it’s only worth about €150 p/m with 16k lump sum aged 60. I looked into the transfer value and it was about €18k, so I just left it where it was.
Spouse also has work DC pension currently valued at about 50k. His employer pays 6% and he pays 4%

Do you own any investment or other property? No

Ages of children: None – no plans to have children

Life insurance: My employer will pay 6x my annual salary in the event of my death. Spouse has no Life insurance.

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

We have had a lot of expense in the last 5 years, we got married, bought our first house together and have spent a lot of money decorating/improving our house. That’s all done now and we would like to start planning for the future. I am planning to start contributing 5% to my pension in AVC’s each month. My husband is planning on doing the same. Is this enough? Is there anything else we should be looking into at this point of our lives? Appreciate any advice, thank you!
 
I would be increasing your pension contributions by a good bit for both you and your partner, once you both hit the 40+ bracket you can each contribute 25% of your salary, including the employer contributions. This would certainly be preferable to saving in a bank etc.

A savings buffer is a nice feeling I know but unless one or both of you would find it hard to get new similarly-paid employment in the event of a redundancy etc there isn't much of a justification to having more than 5k-10k unless your specifically saving for something.

Other than that you seem to be doing well, you could look at what your mortgage breakage fee is and if it would be worthwhile switching to avail of cash back and a better rate - more than likely will be.

A fair amount of expenditure seems to go towards cars - PCP, baloon payments and your OH's savings might be used towards a new car. While a new car is nice, consider the financial side of things too!
 
Update:

Age: 42
Spouse’s/Partner's age: 45

Annual gross income from employment or profession: €71,500 + 8k bonus
Annual gross income of spouse: €68,000

Monthly take-home pay: ~€7,400 after deductions - BIK heath insurance, AVCs etc.

Type of employment: Both private sector

In general are you:
(a) spending more than you earn, or
(b) saving? Saving, 1500 p/m jointly

Rough estimate of value of home: 600K - Traded up (more convenient area) to forever home since last post - House needs to be extended/renovated

Amount outstanding on your mortgage: 393K - 1775 p/m
What interest rate are you paying? 2.65% (2.5yrs remaining - 3yr fixed with PTSB)

Other borrowings – car loans/personal loans etc:
Car loan – None - We only need one car since moving, it's a 2018 so should do us. We may change to an electric car after the house building work is completed and we see how we are fixed.

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 0 on both our cards

Savings and investments:
We have €295,000 on deposit, this is equity from our last house sale and some inheritance.
We are in the process of planning a small 15sqm extension, attic conversion with dormers (it's a bungalow) and renovation of original house.
We estimate this work will take most of this money, we will be doing the detailed costings soon with a QS. We hired an architect to design something within budget and have planning permission submitted, we hope to find out soon.

Do you have a pension scheme?
Yes, work DC pension. My employer contributes 10%. At the moment, I contribute 5% - Current value 105k
DB benefit pension from previous employer. I think it’s only worth about €150 p/m with 16k lump sum aged 60.

Spouse also has work DC pension currently valued at about 70k. His employer pays 6% and he pays 6%

Do you own any investment or other property? No

Ages of children: None – no plans to have children

Life insurance: My employer will pay 6x my annual salary in the event of my death. Spouse has no Life insurance.

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

We have a healthy-ish budget to do renovations and don't want to borrow any more money. We have increased our mortgage, but the house should be worth 850K - 900K when all the work is completed. I don't see us ever moving from here as it's the location we both really love. It suits us perfectly now and will also do so into later years.

I am still worried that we are underfunded for retirement.
Should we wait until all the work is done before looking at increasing the pensions/life cover for spouse?
 
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