Retirement Plan

M

Molzer

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9
My wife and I are both mid fifties hoping to retire at around the 60 mark but looking at the the figures it seems like we will have to wait until old age pension age

Family home paid for no mortgage
One child left in education for 3 more years
2 rental properties (bought just before the crash!! don't ask) @ 1500 / month (before tax) with 90k mortgage but after tax yields very little income
2 private pensions each currently worth 180k
No savings
Both currently working in the private sector on 50K salaries

Should we sell one of the rentals now that the market has improved or hold on (I fear another crash in the future due to oversupply)
Have you any advice on what best to do at this pivotal age?
 
How much are the properties worth and what did you buy them for?

To be honest, it doesn't look like you will have much. You can retire if you want but I wouldn't say you will do so comfortably.


Steven
[broken link removed]
 
yes I am only coming to that realisation now !! must be wearing blinkers
it certainly would not be comfortable
the rentals are worth 325k each but prices seem to be increasing and bought them for 350k each !!!
 
Molzer
Please read the Posting Guidelines. We do not allow speculation on property prices. So don't make any further comments on this issue.

Brendan
 
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Molzer said:
2 rental properties (bought just before the crash!! don't ask) @ 1500 / month (before tax) with 90k mortgage but after tax yields very little income
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You might confirm, are those details per property, or in total?
 
RedOnion said:
You might confirm, are those details per property, or in total?
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Hi Red Onion

I should have been more specific

rental 1 brings in 1650/month with 11k mortgage on a .95% tracker rate property value 360K bought for 333k
rental 2 brings in 1200/month with 76K mortgage on a .95% tracker rate property value 290K bought for 350k
 
Well the rates are low and the rents are covering the mortgages so I’d see those as your revenue source for the future in retirement if I were you.
 
I’m shocked by all this, I’m worried that 360k in pension fund by mid 50s is considered to be essentially worthless to retire on, at any age.

im certainly heading for a poverty stricken retirement in that case. Or are people on here only used to seven figure funds as being the way to comfort in retirement?
 
Mechman said:
I’m shocked by all this, I’m worried that 360k in pension fund by mid 50s is considered to be essentially worthless to retire on, at any age
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I don't think that's what anyone said. But, it's not enough to retire comfortably 7 years early.
 
Mechman said:
I’m shocked by all this, I’m worried that 360k in pension fund by mid 50s is considered to be essentially worthless to retire on, at any age.

im certainly heading for a poverty stricken retirement in that case. Or are people on here only used to seven figure funds as being the way to comfort in retirement?
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Totally agree with you. It's no wonder so many people don't even bother with pensions with all the hyperbole and fear-mongering that go with all the conversations around it. When you are constantly told you need a million or even half a million to avoid poverty in later life, most people just switch off. To get any sort of pension, you need to be putting 10, 20 grand a year into your pension - when someone with a mortgage and kids who likes the odd holiday and not living in constant frugal mode hears this, they just switch off. Anything you can put aside for your pension is a major bonus in my book, but please don't get bogged down in '000's that get thrown around, it will only depress you and probably put you off just putting in what you can when you can.
It wouldn't surprise me if down the line we will get punished for making huge sacrifices to save for our retirement when they stop paying the state pension to people who were prudent enough to save for themselves, and people who never saved, and possible hardly ever worked still get the full non-contributory pension.
 
Mechman said:
I’m shocked by all this, I’m worried that 360k in pension fund by mid 50s is considered to be essentially worthless to retire on, at any age.

im certainly heading for a poverty stricken retirement in that case. Or are people on here only used to seven figure funds as being the way to comfort in retirement?
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Let's say this is a couple with a paid off mortgage each and 2 x state pensions , medical cards, free travel etc. If you estimate that you draw down 360k @ 3%* per year then that brings in another €900 per month. That doesn't look poverty stricken to me, although it's not a life of luxury.

* Other ways of estimating are available.
 
Sorry, can I clarify.
You have 2 properties with 11k and 76k mortgage debt.
Together both properties would sell for 640k.
Which leaves 553k in capital, if both properties liquidated today.
You can then make additional contributions to your pension funds (35% of annual salary) with 40% return, if you are on top rate of paye tax.

Seems to me you would have a tidy sum ( close to 500k each).
Taking a larger chunk in your early 60's would balance up the state pension deficit in those years.

Personally, I would liquidate the cash, in one of the houses and make max contributions to your pension fund. At least that part of your salary, for which you are, currently, paying 40% tax.
 
Molzer said:
Should we sell one of the rentals?
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If you do decide to sell one of the rentals, it should be Property 2 so you can carry forward the €60k capital loss (which you can offset against any subsequent gains). After costs, that would net you around €200k.

In your shoes, I think I would hang on to both rentals (notwithstanding all the challenges of being a landlord these days) and I would focus on increasing your pension contributions to greatest extent that you can afford.

You're actually not in bad financial shape at all - although I think retiring at 60 might be a bit optimistic.
 
This couple's financial future is heavily predicated on the Irish property market.
Both from a rental stream perspective and also capital gains.

Why not diversify, get out of one or both rentals, and put the money into properly diversified investments? Which would also alleviate the burden of being a landlord and having to manage the properties.
 
Sarenco said:
If you do decide to sell one of the rentals, it should be Property 2 so you can carry forward the €60k capital loss (which you can offset against any subsequent gains). After costs, that would net you around €200k.

In your shoes, I think I would hang on to both rentals (notwithstanding all the challenges of being a landlord these days) and I would focus on increasing your pension contributions to greatest extent that you can afford.

You're actually not in bad financial shape at all - although I think retiring at 60 might be a bit optimistic.
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thanks Sarenco I agree with your advice and try to maximise pension contributions from here until then. I can then review retirement options at age 60 with the probability of working a further year or two
 
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