What should I do for the next few years before retirement?

Age:62
Spouse’s age:60

Number and age of children: adults not living with us

Income and expenditure
Annual gross income from employment or profession: approx €100k
Annual gross income of spouse: €105k

Monthly take-home pay Approx €7,300 combined

Type of employment: Both private

In general are you:
(a) spending more than you earn, or
(b) saving? Saving approx 3,500. But we like holidays so savings aren’t growing as much as they could if we put our minds to it,


Summary of Assets and Liabilities
Family home worth €750k, no mortgage
Cash of €60k


Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? yes
If not, what is the balance on your credit card? 0
Car loan with CU about €8 k and balance of €15k in CU shares.


Other savings and investments:

Do you have a pension scheme?
yes, paying max and 20k pa or so to AVCS as well

Hubby maxing his too but late starter

Defined Contribution pension fund:
I have 3 DC schemes
2 old Uk K policies with £110k between them, projected income between them is approx £9k pa. These have been sitting there for decades from back when I was told it was a good idea to put money aside… and fortunately I maintained contact with them. Part of the old opting out mis selling scandal in UK.
ROI AVC schemes fund value €167k projected income about €10k pa currently.

Defined benefit
I’m in a DB scene with pay at retirement date of €34k pa if I retired now that would be €29k it is not payable until I turn 65.

Hubby contributes the max to his scheme now but only started about 5 years ago. (New job and uplift in income, before that he was self employed and didn’t contribute to anything)

Other relevant information
We both worked in UK for years and have applied for and paid up all the back payment and are both on target for about 11k each there.

We know hubby should continue to maximise his DC contributions.

What else should we be doing to provide for retirement or enable him to retire a year or so early.


What other information is relevant?

Annieindublin said:

Annual gross income of spouse: €105

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Did you mean €105K?

Annieindublin said:

Defined benefit
I’m in a DB scene with pay at retirement date of €34k pm, if I retired now that would be €29k it is not payable until I turn 65.

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Did you mean €34K/€29K per annum rather than per month?

Annieindublin said:

Cash of €60k

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? yes
If not, what is the balance on your credit card? 0
Car loan with CU about €8 k and balance of €15k in CU shares.

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Why don't you clear the car loan and avoid paying interest unnecessarily?

So just to summarise, at retirement age you would have a DB of €29-34k pa, plus two UK pensions of GBP11.5k, plus whatever you are each entitled to from the Irish COAP? Have you checked on welfare.ie where you each stand re credits / expected pensions here in Ireland? Will your DB continue to pay out a certain percentage to your spouse after your demise? You're pretty well set there from 65 onwards given your current rate of expenditure (less discretionary holiday spending).

In addition to guaranteed pensions above, you also have €132k/£110k in UK pensions - are you obliged to take these as annuities or can you transfer them into an ARF-like wrapper to give you more flexibility? You also have 60k cash plus €167k AVC plus you didn't mention where your spouse's 5 years of AVC's have grown to but presumably it's in the order of (5 years at 35% of 105k salary plus growth) so north of €200k? If so, that would seem to be enough to bridge you from early 60's to 65/66 at your current rate of expenditure, depending on your holiday funding needs.

Corrected the errors.

My DB pension pays a reduced amount to a widower.

I think I can take the UK money out but I’m not sure of the tax implications of doing that.

Husband has about 180k, he is to dig out the figures.

I need to check with welfare about our state pensions. I’ve been working here for c 30 years plus another 5 post uni before I moved to UK but husband was self employed when we moved here so I don’t what he is entitled to. He completed tax returns, didn’t pay a lot of tax most years but always paid NI of course.

We probably should clear the car loan, we were vaguely planning some house renovations which we have decided against so I wanted to keep the cash available.

We do need to renovate 2 bathrooms though so that will absorb a fair chunk of change.

1) Clear the car loan
2) Establish what Irish COAP you are each entitled to by signing up for MyGovID's and checking on MyWelfare.ie
3) Draw up a retirement budget (at current prices) - we can get an indication from your current spending profile, but your holiday spend, etc is a question mark, as well as the impact of any other lifestyle changes in retirement (e.g. higher home heating bills, lower discretionary spending on coffees/lunches at work, for example).

But on the whole, it looks to me like you guys could retire today if you wanted to, using your various funds to bridge until fixed income's kick in at 65/66. But you may be happy to continue working for another few years to cover any upcoming large expenses like bathroom renovations, to increase your holiday funding, etc.

Well done!

Well done Annie! You are in great shape.

I'd clear the CU loan with your CU shares and keep the cash on hand for your renovations etc.

I take it that your AVC are tied to your current employment ? When you say its worth circa 10k per annum do you mean you want to buy an annuity with it ? Or will you put it into an ARF ?

As others have mentioned look at any large cost items now and have them paid off before you retire e.g. renovations
new car
solar panels
improvements to house insulation/windows etc.

You look to be doing everything right, keep on going the way you are.

Annieindublin said:

(b) saving? Saving approx 3,500. But we like holidays so savings aren’t growing as much as they could if we put our minds to it

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Just something that jumped out at me. Why would you want your savings to be growing to the detriment of having great holidays, when you are in your sixties? It's that mindset (not saying that you have it), that sees people dying with loads of money in the bank, and not having lived.

Certainly there's a balance, but to me, I'd rather be having the holidays rather than increasing my savings, when it looks like the pensions are OK.

I watched my parents save and wait for holidays then get feeble and unable to travel so we are doing what we can when we can.

We downsized to an apartment a couple of years ago partly to minimise renovations as our house needed updating and repairs.we have 2 dubious bathrooms though.

I will do that budget too. Good idea. We don’t scrimp now and be interesting to see it written out.

I haven’t worked out what to do with the AVCs, the €10k is an estimate from them. I’m not sure how accurate that is.

Check in up on state pensions.

I got the statement from social welfare. I have gaps in it when I was in the Uk of course and oddly another crop of years where I am only credited with 44 45 or 46 contributions. This makes no sense as I was working full time over those years.

The total contributions is 1644 but I can’t see how to work out the impact that has on the pension or if I can top up like the Uk.

Does having worked less than 40 years here make a massive difference?

You'd qualify for 1644/2080 of the 289.30pw COAP - so €228.65pw from age 66. Deferring to age 70 will increase it, as will further reckonable contributions over the coming years, or indeed chasing down those 6-8 lost contributions from prior years.

How did you find the downsizing? I am very interested to hear your experience on that as it does not seem to happen very often! Did you move to a different area? What is the composition of the apartment block ie is it a lot of people of your life stage or is it varied?

Annieindublin said:

and oddly another crop of years where I am only credited with 44 45 or 46 contributions. This makes no sense as I was working full time over those years

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I mentioned elsewhere that I was missing 26 contributions from my 2000/2001 record and queried it recently. Turns out that they had been remitted under an incorrect PPSN and the Department of Social Protection were able to correct my record based on the corroborating information that I was able to provide them with (payslips, P60s and some other info for that period). So it might be worth checking with them in case they can add/restore the missing contributions to your record.

I’ll do that. Very odd. With the same employer, I’m still with them so should be able to work it out.

@misemoi

I meant to reply to you earlier. Apologies.

Initially we figured we’d sell the big family home and buy a small apartment for the 2 of us with a guest room/home office when the kids left home. And invest a fair chunk into a second property to let out.
Then Covid meant we were both wfh all the time. So when the kids left, post covid, we had changed our minds about a small city centre place. When you are both working from home most of the time you need more than the corner of a dining table.

However we still moved, our house needed investment, new bathroom, probably new windows and neither of us were too bothered about the garden. So rather than use our savings to sort out a 5 bedroom house we declutterred and got rid of a lot of stuff and moved into an apartment. It’s a big apartment and it’s not city centre. We have the top floor so we also have attic space plus a storage room in the basement car park so we didn’t have to get rid of all our possessions. We did have a lot to dispose of, some sold and lot given away via free cycle websites and neighbourhood groups.

We moved a few miles, but we made sure we are close to public transport, local shop and amenities. All easy walks away. We still have 2 cars but in the long term we would be able to walk to most things. I see my elderly parents similarly situated and for the most part it works.

The development is very quiet, it’s about 25 years old, a mix of sizes, large duplexes and one beds plus a few houses. So mix of families with small kids and couples and singles. A fair few retired. No one with teens interestingly. I believe it’s about 50:50 rented v owned.

We like the simpler maintenance, the grounds are well cared for. Repairs are prompt. We have electric powered gates to the road and another to the car park. The soundproofing is ok, we don’t hear much and although we’ve wooden floors the people below say that they don’t hear much. The lifts are never out of order. But management fees are €3k. That includes building insurance of course and bin charges.

We are happy that we made the move while we could. My parents talked about it but didn’t and now it would be too much for them. To be fair they were never inclined to leave their beloved garden. Even if it’s too much work for them these days.

If either of the kids needed to return we’d manage, we have 3 bedrooms, certainly for a while but they are in their 30s now so that’s probably not happening. You never know though.

We are happy that we made the move. When we go away which we do as much as we can it is easy to lock up and leave. It feels more secure than our house did.

Financially it was almost break even. Apartment prices in Dublin are insane. We cleared enough to give the kids a few thousand each to help them and we’ve a bit left over in the bank. We could have cleared more if we hadn’t fallen for an expensive place in an expensive area. However I reckon if we ever decided to move abroad (we arr thinking of a year in the sun) we could let this place for a decent rent and that would be a nice extra income for us.

Thanks for sharing that! Makes it clearer that downsizing is less about releasing equity and more about releasing the obligation to maintain a family home when it's back to just being a couple again.

I really think the only way to release equity, for most average family homes, is to move out of Dublin or at least to a much cheaper area.
We saw so many unbelievably bad apartments, (fire safety still an issue in some places, also pyrite) and we didn’t want to take on a major rebuilding project, cute artisan cottages did feature in my initial plans but having looked at a few renovated and a few in need of renovation we realised we didn’t want to tackle that.

I’ve emailed our payroll about the missing contributions.
Not having 2080 contributions has quite an impact. Even with a few years yet to add to the total.

I guess my UK pension makes up part of that. 8 full years (plus 2 part years) away from Ireland makes a difference.

Annieindublin said:

I’ve emailed our payroll about the missing contributions.

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Were you with this employer during the time of the "missing" contributions? If not then you might need to contact the relevant previous employer or simply contact the Department of Social Protection directly.

I’m still in the same place. And we have the same payroll person.