Moneymakeover Redundant at 52, is returning to the workforce the best use of my time?

J

J Mount

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Personal details
Your age: 53
Your spouse's age: 51

Number and age of children: 27,23,21 (all 3 with college degrees, all 3 sometimes living at home, 1 earning a good salary)

Income and expenditure
Annual gross income from employment or profession: 0. Became redundant 12 months ago, previously 90k
Annual gross income of spouse/partner: 90k, employee private company.

Monthly take-home pay: 3.8k (after tax, health insurance & maximising pension contribution)
In general we are spending 3-4k monthly.

Summary of Assets and Liabilities
Family home value: 700k, no mortgage
Cash: 120k (from redundancy, not sure what to do with it, sitting in a bankaccount losing against inflation)
Defined Contribution pension fund: 920k
Company shares : 120k

No borrowings – car loans etc...

Pension information
Value of pension fund: 900k (across ~6 various pensions). Own pension is 600k, spouse's is 300k
No life insurance, no employment insurance, minimal house insurance.
Good Health insurance.

Other properties
Derelict cottage an hour away: 175k no mortgage
Doing up this cottage and it's large garden, at our leisure is a fun project for us that we enjoy.
We don't see it as a financial investment or money-making . A bit of a cultural, environmental, future grandchildren investment.
We are well aware that to employ someone to do it up could be a huge money sink. We possibly could, but are not planning on availing of derelict homes etc grants..

What specific question do you have or what issues are of concern to you?
I never saw myself as 'retiring'. I worked as a consultant, loved my work, have never been driven by money, but have a need for basic financial security.
Now, I've cleared my mortgage, have a reasonable pension fund and the 3 kids are almost fully fledged, and was made redundant.
My spouse has a good salary and is maximizing their pension.
It seems we can survive financially on one salary.
We have no desire for luxury - enjoy travelling at low cost and low environmental impact.

I would like to be able to help the children (~8-100k each) towards a house deposit at some stage. They are likely and welcome to live (with partners) in our house for the forseeable ~10 years.

I feel I've moved from budget management (in my 20's, 30's, 40's) to wealth management. I was good at budget management... I don't feel at ease with wealth management. I feel if we live to 80, all will be grand. But if we live to 90 or 100.... then we could become impoverished/ a financial burden. However I don't really want to trade another 10 years of fulltime employment in my 50's for 10 years leisure in my 90s. My spouse is content to continue working the next 10 years.

I feel able and keen to work, but rather part-time and something I really care about. I'm reluctant to take on a full-time role, contracting 9 months on, 6 months off would be my ideal
I find it hard not to be pulling my weight financially to the household, but I have done so in the past and genuinely feel that focus on family, health and social connections may be the more rewarding investment of my time for both of us.

1. Am I missing something major?
2. Even with doing up cottage ourselves, materials and some jobs (roofing, excavating.... are beyond us) how do I reasonably set a budget for such an interest?
 
Reactions: jim
It’s difficult to know how to approach your post but I’ll give it a go.

Maybe the question is whether you can afford to retire now?

Between your DC pension, shares and cash you have approximately €840k in assets, which I think you could sustainably draw down at a rate of around €28k per annum.

Could you live happily on €28k per annum? I know I couldn’t.

I certainly don’t think you can afford to renovate a derelict cottage or to make material gifts to your kids.

Personally, I don’t think it’s a good idea to rely on your spouse’s income if you have any choice in the matter.
 
I don't think that at this stage of your life you can plan to give away 300k.
Sarenco said:
Personally, I don’t think it’s a good idea to rely on your spouse’s income if you have any choice in the matter
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Why not, I would have thought that couple could think of their finance as a unit to plan their chosen life.
 
How are you planning to occupy your next 10 years? My understanding is that you have been off for a year, have you looked into job opportunities part-time?
 
@Premos

Well, it’s a personal opinion, but I’m pretty sure my spouse would resent it if I expected her to fund my life of leisure!

Given the OP’s financial objectives, I don’t he really has the option to retire now.
 
Sarenco said:
I’m pretty sure my spouse would resent it if I expected her to fund my life of leisure!
Click to expand...
It somewhat depends on what the person is going to do with their time and if the other spouse decide that they do actually want to work another 10 years. My parents retired early. My mum couldn't stand it. She ended up back to work for another 25 years.
In that case, my dad resented her for not being free and available to do what they had plan together. Finances were not an issue.
 
I think I’d look at what I wanted, what’s a priority for us as a couple.

Fab holidays? Money for the kids? Rainy day fund? Renovate the old house so we can enjoy it?

Everyone has a few ideas I’m sure.

And, if I could, I’d work sufficiently to have that set up then quit. Unfortunately most of us can’t pick and choose jobs but if youve the opportunity to do consulting work where you can actually pick and choose then I’d do that until I had funded the goal and then pack it in.

All this would be decided as a couple though. Me retiring while hubby worked for another decade probably wouldn’t be popular with him. But I know lots of couples where that works. In general though where I see that among friends theres an age gap and the older one is retired.
 
Be careful. One spouse working while the other isn't can lead to resentment particularly if the spouse working feels they have to continue for financial reasons.
 
Sarenco said:
Did your Mum finance your Dad’s lifestyle?
Click to expand...
No. But it was her choice to work, he didn't agree. As I said in my post, it really depends on what they both want.
We have no idea how the couple worked for years, who financed what, who earned more when and what are the both aspiring to.
 
@Premos

To be clear, I would have no issue with one spouse retiring early if they can afford to do so while the other spouse continues working to fund an expensive hobby (or whatever).

Where I think resentment would build is a scenario where one spouse voluntarily exits the workforce and then expects their spouse to fund their lifestyle.
 
They will not provide nothing, they will be able to provide 2 k a month. The couple live on 4 k now. So in theory, each of them will be able to finance their current lifestyle.
I do understand your point and the resentment it could create if the decision is not somewhat taken together.
However currently one seems to have 840 to their name and the other has 300k. Should the one who has accumulated the most wealth resent the one that has less because they should both continue to work? If they had both accumulated 840k, they might be able to both stop working?
Personally I would not necessarily decide to retire at 53. I think that going back to work and going through the process of finding a job after redundancy can be really difficult and perhaps it's one of the reason why the OP is looking into retiring. However if they are eager to work and want to find something they really want to do and enjoy, I would think the best option would be to explore job opportunities.
 
I really appreciate all your inputs! It helps me put things in perspective.
Personally, I don’t think it’s a good idea to rely on your spouse’s income if you have any choice in the matter.
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Yes - I've struggled with being financially 'dependent'. But am learning that's my issue, in my head. My spouse repeatedly says they don't resent it, and that they would struggle (with their time) if they weren't working. The past year, life is much easier, all the house stuff, life admin, social demands just get catered for easily. I'm available for the family, extended family, friends and I find it fulfilling. Life runs smoother, and my partner who works from home, can spend their freetime pursuing their active sports and volunteering activities without any resentment from me. Before, weekends were spent catching up on stuff we had to do, now we have freedom to spend them doing what we'd like.

And I feared that I was mostly working to earn enough to be able to give my children a start on their own houses. As @misemoi pointed out,
No rent for 10 years earning hopefully a decent professional salary *2 people means that they should be able to save their own deposit?
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... I hadn't quite worked that out for myself, but I see now that is actually where my gut feeling is. ie. My choice is between us parents earning the deposit to give our children, OR enabling our household to adapt and support them to be able to earn it themselves.

(just to clarify I don't expect all 3 to live with partners at home simultaneously, but I'd hope to accommodate all of them if they needed to do it for a while and all to live singly at home as long as they wanted. ) While still working, I think I'd find that really stressful, with the luxury of not needing to go out to work, I think I can make the household just hum smoother

What have I been doing?
I have been doing lots of DIYing and making efficiencies to minimise expenses and just make living easier. The household needs to change with adult children... I'm figuring ways to make that work for all of us. eg. The derelict cottage is a bit of an off-grid haven ...it's somewhere us parents can happily retreat to (at least in the warmer 6 months of the year) to reduce the pressure valve of us all living under the one roof. (and it now has enough solar power to enable work from home from there)

I loved my job, but have struggled to find as fulfilling and convenient a position again.
If I could find satisfying similar employment for ~15-20 hours a week that would be absolutely ideal, but hard to come by. It would keep my skills up to date and make a significant contribution financially and also from tax relief and pension entitlements point of view. I've toyed with alternative careers and more accessible/available positions (becoming an apprentice or sales assistant or carer for a complete change), or starting my own business, but don't think I'd have the sticking power.
If my current finances don't realistically allow me to leave the paid workforce now I'd try harder to return to the previous status-quo if needed, I'm just asking for some crowd wisdom on what's feasible and wise.
@Premos - I really, really appreciate your insights. It has been very diplomatic and helpful and stuff I need to hear. thank-you and everyone for the responses!

(btw - we view all the income / pension / properties as 100% joint and both of us have contributed roughly equally to parenting and earning all along)
 
Thanks for the further context, it’s very helpful.

I think the first thing you need to do is figure out your “burn rate” - what are you currently spending every year as a couple?

There’s really no substitute for getting out bank statements for the last three years and totting up your expenditure.

Once you have a good grasp on your outgoings, you can then start to work out a plan as to how you will fund these expenses (a) while your spouse is still working; and (b) after you have both retired.
 
What are the statuses of both your COAP’s? You probably have about 30 of the required 40 years of contributions? I personally would think it’s important that whatever you do now, you get yourself to that full COAP
mark even if that means alternating periods of part-time/low-income employment and claiming unemployment benefit/stamps.
 
Overall though, I’d say your plan seems fair enough - your partner is happy to continue working, you are contributing to family life in a meaningful way, you have a means of assisting your kids (but forget about 100k each, that’s not a runner unless you go back to work), and you seem happy enough with things in yourself. That said, I suspect you’ll eventually find alternative work if more for the satisfaction/fulfilment than the income… you can see the acorn in your mind about that already.
 
Sarenco said:
Between your DC pension, shares and cash you have approximately €840k in assets, which I think you could sustainably draw down at a rate of around €28k per annum.
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3.3%?

Is that the 4% rule with some typical Irish fund charges? Or some rule of thumb for someone age 53.

I'm not saying it's an unrealistic figure but just wondering how you came to it. If it's based on the 4% rule then it'd be 28k rising at the rate of inflation each year so that might be acceptable.

Are the 120k in company shares in a single company? And if sold would there be significant CGT?
 
Sarenco said:
Where I think resentment would build is a scenario where one spouse voluntarily exits the workforce and then expects their spouse to fund their lifestyle.
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Everyone is different. I for one can’t wait for the day I get to tell my wife she can retire now while I continue to work and save for my retirement afterwards.
 
@ashambles

The OP is 53, so I allowed for 30 years of expenses, adjusting for inflation each year.

I’ve ignored tax on the pension draw downs and the State pension for simplicity.

@jpmackey

Fair enough but would you feel comfortable voluntarily exiting the workforce and living off your wife’s earnings?
 
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