Moneymakeover Should I be able to retire at 60 or wait till 62/63

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PDCAT1

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Personal details

Your age: 53
Your spouse's age: 49

Number and age of children: 2, age 13 twins

Income and expenditure
Annual gross income from employment or profession: 80k
Annual gross income of spouse/partner: 10k

Total: 90k


Type of employment / Employer type:
i Am employed in private sector.
my wife is minding kids from home for a friend

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving – Maxing my pension putting 30% of salary into pension plus employer 5%.
26000 per annum into DC pension.

Summary of Assets and Liabilities
Assets:
Wife inherited house and land - 600k
Own house (no mortgage) - 400k
Stocks (from previous companies i worked for) - 250k
Irish Solidarity Bond ( An post) - 250K (another 8 years to run) Final total will be 292K
Raisin a/c - 31K
Credit Union a/cs - 35K
Bank a/cs - 15k
Also im due about 50k from my mams inheritance. Passed away few weeks ago.

Liabilities

None - unless you count 100 euro per week on keeping pony in livery
Pony valued at 10k

Pension Informaton

Defined Contribution pension fund:

Me: Two DC pensions from 2 companies. Total value at present - 200k (currently working on maxing out this until 60)
Defined Benefit pension - 10k per annum (from previous company)


Company shares : just shares mentioned above- Value 250k

Buy to Let Property value: Wife is leasing the land - 14k per annum


Family home mortgage information
No Mortgage

Other borrowings – car loans/personal loans etc
None.

Do you pay off your full credit card balance each month? - dont use CC
If not, what is the balance on your credit card? N/a


Other information which might be relevant:

For State Contributory pension
Me - currently have 1500 contributions
Wife - Currently has 1399 contributions

Trying to make sure we can get as close to 2080 as possible.


Life insurance:
Me: (Included as part on my job - think its 3x salary


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

Our family have a number of deaths recently and has made us think about enjoying our time, we love to travel and fittness is big for us.
We have expenses coming down the line with two girls probably going away to college, getting them small cars etc...
We would also like to leave a good inheritance for them, it would help them a lot, like it has helped us.
My plan was possibly to retire at 60 ish.
Age (60- 64) - Use 15k from my wifes land lease with 35k from my an post solidarity bond (live on 50k)
Age 65 - Use 15k from wifes land lease, plus 10k from my DB pension plus 25k from an post solidarity money.
Age (66 - onwards) - 15k land lease, 9k DB pension, 15k State pension, DC pension draw down, plus wifes state pension when she huts 66) Not sure what to do with 25% lump sum from DC pension)
Would hope to leave wifes land and house, our own home and stocks to kids as inheritance. Will need to sit down with a professional to try and reduce inheritance tax if possible.
I know it looks a bit messy, but hoping somebody with a greater understanding of all things related to pensions might see something i might me missing.
Thank you in advance.
 
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Thanks very much for all this work geraldo. The tool looks very impressive and has definitely highlighted the fact thst a lot of my savings are low risk and possibly not making the most of these savings. Will be looking at moving some of these down the line. Also the retirement info is really interesting. My wife has previously availed of the agricultural relief and saved a lot on tax when she inherited from her Dad. Not sure of visiting a financial advisor should happen now or in a couple of years closer to age 60. Thanks again.
 
PDCAT1 said:
has definitely highlighted the fact thst a lot of my savings are low risk and possibly not making the most of these savings
Click to expand...
A key thing here is the asset allocation of your pension savings. What are they invested in?
 
As far as I can see...
  • Property/land: €1M
  • Equities: €250K
  • Cash/equivalents: €331K
  • Inheritance: €50K
  • Total: c. €1.6M
  • Pensions: €200K + DB of €10K p.a.
  • Overall a fairly comfortable financial situation as far as I can see
But, in my opinion...
  • You're very (overly) invested in property/land
  • Your equity investment seems to be concentrated in one share?
  • Both of these should be reviewed to see if better diversification can be achieved
  • Your pension asset allocation needs clarification
  • Your spouse doesn't seem to have much/any pension cover apart from the possibility of the state pension?
 

Should I be able to retire at 60 or wait till 62/63​

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Without knowing your likely/desired retirement lifestyle/budget this is an impossible question to answer. You need to clearly analyse your current household expenditure, and then try to clarify what your retirement household expenditure is likely to be.

Moneymakeover - Household Budgeting Comparisons?

Not sure if the correct place... Life has been in (financial) flux for the last 4 years (house purchased, wedding, new baby, mat leave) but 2025 has brought some stability so I have had a look at our income and expenses. I track both pretty well. We both have decent incomes, don't live...
www.askaboutmoney.com
 
Hi Clubman
Thanks for your replies.
We are overly invested in property and land due to inheritance. My wife was an only child. She rents out her land for 14k per year to dairy farmers. She wants to hold onto this as it has sentimental value, aa well as her fathers wishes. She would like to pass this down to her girls. The rest is our own home.

My equity is invested in 3 companies which i worked for. Their is quite a large profit on these as ive held them for close to 20/25 years. My understanding is that by passing these down to my kids, they get the share price at the day i die and not at the day i bought. I need to confirm this.

Pension Allocation
I have a DB pension of 10k per year from a previous company.
I have two DC pensions. One from a previous company valued at 80k which is invested in high risk strategy.
The second DC pension is my current company. Its invested in a lifesyle fund with risk reducing as i age. Its valued at 120k but i am adding 26k ( maxing my pension) and plan to continue to do so for the next 7 years. Hoping my DC pensions combined will end up around 400k.

My spouse should have state pensiion as we are working towards getting close to max contribution as possible. Plus 14k from rented land. She also was left her fathers old house whuch needs a lot of work. Shes unsure whether there is any return on investment in renting it as it needs so much work. She might just leave it. Also the an post savings are hers aswell as she had a business for 12 years and we coupled our money together to save it with an post. Still has 8 years to run.

Also. You are correct in saying that we need to calculate our household spending figures for retirement. Had picked a figure of 50k between the ages of 60-65 which i felt was enough for us. And then increase when state pensions and work pensions kick in. Will have to discuss with FA, the most tax efficient method of drawing down this money as well as most tax efficient method of dealing with inheritance issues.
Thanks again.
 
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PDCAT1 said:
My equity is invested in 3 companies which i worked for.
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That still sounds like quite a risky and undiversified investment approach to me.
PDCAT1 said:
Their is quite a large profit on these as ive held them for close to 20/25 years. My understanding is that by passing these down to my kids, they get the share price at the day i die and not at the day i bought. I need to confirm this.
Click to expand...
Correct.

Key Post - Capital Gains Tax & Estates & Capital Acquisitions Tax

This has come up in a few threads and I will try to give my take on it. Death, as a general rule does not give rise to a Capital Gains Tax Event. The Executor/Administrator acquire the assets at the market value at the date of death. In general the executor will apply for a grant of probate...
www.askaboutmoney.com
PDCAT1 said:
The second DC pension is my current company. Its invested in a lifesyle fund with risk reducing as i age.
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At your age I would think that an all equity approach could be more appropriate.

A critique of the lifestyling approach to pensions

I came across a paper which may help the PA answer some of those questions: "Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice" https://www.netspar.nl/assets/uploads/19.-Cederburg-ACO_Manuscript.pdf "Our findings suggest that financial advice and pension regulations...
www.askaboutmoney.com

The fallacy of "lifestyling"

I was recently made aware of a situation which highlights the total fallacy of "lifestyling". The basic premise behind lifestyling is that one should invest in growth assets up to, say, 10 years before retirement and then ease into bonds/cash or "safer" investments as you approach retirement...
www.askaboutmoney.com
 
Thanks Clubman.
Yes, invested in 3 companies is very low. I received these shares whilst working for these companies.
My yearly bonus was invested in these for over 20 years. By placing the bonus in shares, and holding them for 3 years this enabled me to recieve them without paying any tax. Received approx 80k in shares, instead of taking home 40k, kept all 80k in the shares for 3 years. Now valued at 250k. Fluctuates a lot. For example one shareholding has increased by 140k this last 12 months alone.

The second DC pension i think is currently invested in medium risk as part of this lifestyle fund. Has increased a lot this past couple of years. Need to look into it further to see what changes i can make.
 
PDCAT1 said:
Yes, invested in 3 companies is very low. I received these shares whilst working for these companies.
My yearly bonus was invested in these for over 20 years. By placing the bonus in shares, and holding them for 3 years this enabled me to recieve them without paying any tax. Received approx 80k in shares, instead of taking home 40k, kept all 80k in the shares for 3 years. Now valued at 250k. Fluctuates a lot. For example one shareholding has increased by 140k this last 12 months alone.
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Most people and advisors would probably recommend a more diversified approach to non pension equity investments. Holding shares in just three companies (probably in the same sector if you worked for them all?) is likely to be more risky and volatile than is prudent.
 
Totally agree with you clubman. I would not have put my bonuses into those shares only for the tax benefit we received at the time. Sectors are semi conductor and two in medical device. Would probably have to pay a lot of tax to sell them and reinvest. My plan was to leave them for the kids as they wouldnt have the same level of tax.
 
PDCAT1 said:
Would probably have to pay a lot of tax to sell them and reinvest.
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Yes, but you would only pay less than one third of a lot of profit.
PDCAT1 said:
My plan was to leave them for the kids as they wouldnt have the same level of tax.
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You're 53. By the time this happens these companies could well have gone bust. If it was me I'd much prefer a more diversified approach.

Anyway, just my opinions...
 
Fair enough clubman. You could be right. Maybe ill change my plans in the future. Companies are Intel, Abbott & Abbvie. Massive blue chip companies which have had a strong year on the markets. Tax bill would probably about about 60/70k or so. Would save that 60/70k by giving to the kids. Then, again those shares could go up/ down and the kids will get more/less. I might change my stance on this down the line.
 
This is complicated, but let's try to break it down


ClubMan said:
  • Property/land: €1M
  • Equities: €250K
  • Cash/equivalents: €331K
  • Inheritance: €50K
  • Total: c. €1.6M
  • Pensions: €200K + DB of €10K p.a.
Click to expand...

My initial reaction was that you must sell most of the three shares immediately and just face the tax. By the time you die, the exemption from CGT on death will probably be gone. So you are probably not saving tax by selling them now.

However, on reflection, it's not that important. You have about €2m in total assets. So if all three companies went to zero in the morning, you would be losing "only" about 10% of your wealth. Not a hit you want, but not a big hit either. So if you want to keep them fine.

However, on further reflection, get rid of them now or reduce them to $60k as if you die suddenly, your estate will face US Estate Taxes.

Key Post - Be careful if you hold more than $60,000 in US equities

Of course what most people don't appreciate is that if you are not a US citizen or US resident and you hold more than $60,000 in US equities then US estate taxes apply to transfers between spouses on death. That's right if you die your spouse or civil partner would have to pay US Estate taxes...
www.askaboutmoney.com

Of course, this US Estate Tax on non-residents might well be gone by the time you die.
 
When did your wife inherit the land?

I do understand the emotional attachment to the land. But it would be much better for your wife to deal with it now and sell the land than to pass it on to your daughters and all the guilt that goes with that.

It would also be much better for the farmers who farm the land to own the land.

If your wife is recently bereaved, then it's not the time to push it. But at some stage you should sit her down.

I would much prefer my parents to be living a happy retired life travelling the World rather than working until age 65 so that they could leave me a farm I don't want and shares in companies. And if they did not need the money for themselves, I would prefer them to sell the land and the shares and give me the money when I can get on the property ladder.

If you give your daughters a choice - "Darlings, would you like to inherit a farm and some shares in thirty years time, or would you like me to buy a house for you now so that you don't have to rent when you are going to college in September?" - what do you think they would say?
 
So, it's fairly clear.
1) Sell the land
2) Sell the shares down to $60k
3) Invest the proceeds and the rest as it becomes available in a diversified portfolio of shares.
4) Buy a nice property close to college for your daughters.

Plan on retiring at 60.

But you do not need to make that decision now. Review the plan when they have started college.

If you want to retire and go travelling, do so. You can well afford it.
If you are still enjoying your job, continue working and building up wealth to leave to your children.
 
Thanks Brendan.
After seeing clubmans and your comments, im going to look into and calculate how much tax is due on these shares. If the 60000 limit on US shares in play, it doesnt save me much by holding onto them and i feel the intel shares at the minute are near a peak.
Will probably look to reinvest into some sort of investment vehicle with low costs. Not too knowlegeable on these, but something like ETF's or some investment that tracks S & P500. Will have to do some research on this.

Regarding the house & farm, my wife inherited. Her father passed 4 weeks ago, but land and house has been tranferred to her for 10 years. She has been renting the land to two dairy farmers since then, who both look after the land really well. She gets 14k a year for this after tax. She has the state pension when she gets to 66 and was planning on using this 14k as a top up.
She inherited the land by claiming agricultural relief and paid little tax and was hoping to pass it on to one of her daughters in similiar vein, with the daughter receiving the 14k rent in the future.
As the girls are young, she has a some time to think about this.
Thanks again
 
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PDCAT1 said:
She would like to pass this down to her girls. The rest is our own home.
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PDCAT1 said:
My understanding is that by passing these down to my kids, they get the share price at the day i die and not at the day i bought. I need to confirm this
Click to expand...
Ok, the reality then is that you have €1.25m less investible assets than previously stated.
 
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Fortune said:
And don't buy it until you know where they're going.
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And definitely do not attempt to rent it out. Ever. You will lose a lot of property rights if you do and may not be able to use it when you actually need it
 
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