33yrs High Salary = High Tax Help

S

solarman2022

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Hi all I was directed here by a friend for some knowledge.

Basically Im 33 on a 90k salary unmarried with 1 dependent. At least 30k is being taken by revenue. It makes me sick that I work my ass off to earn this salary and I don’t get to see much of it less qualified people can be taking home more than me in some jobs.

I have no debt , no mortgage (housesitting my parents house) and over 100k in savings .

I do want to buy my own house but prices are crazy and I don’t think there’s value in the market at present and I feel I would be putting myself under financial strain then to pay mortgage and all associated costs.

On average I save around 500 per week after rent bills and allocating money to enjoy and grocery’s etc.

I was looking at setting up an PRSA execution only and asking for a pay rise in the form of contributions ….. I know there’s tax relief and if I put 10k in a year some calculators have said my weekly take home would be only a 100 less ….. a lot people say it’s a no brainer but I may not even live to see that money or could lose it all.

I was looking at investing a small regular amount in the hope of some growth with a Zurich execution only plan

The bottom line is I don’t want to sacrifice too much of my lifestyle for a day that may never come

Should I be worrying about this stuff now getting more salary will only mean more tax.

Thank you
 
There are things you could do to optimise your financial situation for sure, but IMO the first thing you need to change is your psychological perspective on things.

solarman2022 said:
Basically Im 33 on a 90k salary unmarried with 1 dependent. At least 30k is being taken by revenue. It makes me sick that I work my ass off to earn this salary and I don’t get to see much of it less qualified people can be taking home more than me in some jobs.
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At 33 you are earning significantly more net than the average person in the country earns gross. Your salary at 33 is the at or well above the pinnacle of many career paths. I'm sure you have worked hard to be where you are, but you are doing well financially now.

There will always be people earning more than you. Comparison is the thief of joy.
solarman2022 said:
I do want to buy my own house but prices are crazy and I don’t think there’s value in the market at present and I feel I would be putting myself under financial strain then to pay mortgage and all associated costs.
Click to expand...
Based on your salary and savings, you can well afford to buy a house without putting yourself under major strain. Your impediment again is your perspective and your perception of the "value" of property at their current prices. When I bought in 2017 people were saying the same thing - housing is overpriced. Anyone who held off then waiting for better value has watched prices rise double-digit percentages each of the 6 years since, nevermind the financial and personal cost of renting in the meantime.

Have you a level in mind that you perceive there to be "value" in the housing market?

I was looking at setting up an PRSA execution only and asking for a pay rise in the form of contributions ….. I know there’s tax relief and if I put 10k in a year some calculators have said my weekly take home would be only a 100 less ….. a lot people say it’s a no brainer but I may not even live to see that money or could lose it all
Click to expand...
Do you have a particular reason you believe you won't live until 50 (the age you can technically start drawing down pension funds)? Do you have a scenario in mind where a diverse and passive equity investment would lead to you "losing it all"? Again, I think your perspective needs to be ammended here. People could advise specific products to you but until you are mentally bought in to the idea of saving for retirement I don't see you committing to a strategy.
solarman2022 said:
Should I be worrying about this stuff now getting more salary will only mean more tax.
Click to expand...
Focus on what you gain rather than what you lose. You'll get to keep half of all additional extra pay. It'll also increase the amount you can contribute to your pension, and the benefits to mortgage affordability.
 
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At 90k, you can contribute 18k (20% of gross earnings) to your pension/PRSA, which would reduce your tax bill by over 7k.
You can access this from age 50 in many cases, not as far away as you think.
 
solarman2022 said:
I do want to buy my own house but prices are crazy and I don’t think there’s value in the market at present and I feel I would be putting myself under financial strain then to pay mortgage and all associated costs.
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There is no model that shows a significant overvaluation of Irish house prices vis-a-vis fundamentals at the moment.

Prices can and will rise or fall but over a decade or two it’s highly unlikely that you will see a decline in cash terms or would have been better off renting.
 
solarman2022 said:
The bottom line is I don’t want to sacrifice too much of my lifestyle for a day that may never come
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How much of the lifestyle will you have to sacrifice?
Also, it's highly likely that day will come (unless there is a medical condition that you have not mentioned).
 
solarman2022 said:
unmarried with 1 dependent.
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I presume this is a child of yours, in which case saving for a pension is saving for them (and perhaps the others parent depending on your situation) if, for some reason, you don't survive to draw it fully or at all.
solarman2022 said:
I was looking at setting up an PRSA execution only and asking for a pay rise in the form of contributions ….. I know there’s tax relief and if I put 10k in a year some calculators have said my weekly take home would be only a 100 less ….. a lot people say it’s a no brainer but I may not even live to see that money or could lose it all.
Click to expand...
 
solarman2022 said:
Hi all I was directed here by a friend for some knowledge.

Basically Im 33 on a 90k salary unmarried with 1 dependent. At least 30k is being taken by revenue. It makes me sick that I work my ass off to earn this salary and I don’t get to see much of it less qualified people can be taking home more than me in some jobs.

I have no debt , no mortgage (housesitting my parents house) and over 100k in savings .

I do want to buy my own house but prices are crazy and I don’t think there’s value in the market at present and I feel I would be putting myself under financial strain then to pay mortgage and all associated costs.

On average I save around 500 per week after rent bills and allocating money to enjoy and grocery’s etc.

I was looking at setting up an PRSA execution only and asking for a pay rise in the form of contributions ….. I know there’s tax relief and if I put 10k in a year some calculators have said my weekly take home would be only a 100 less ….. a lot people say it’s a no brainer but I may not even live to see that money or could lose it all.

I was looking at investing a small regular amount in the hope of some growth with a Zurich execution only plan

The bottom line is I don’t want to sacrifice too much of my lifestyle for a day that may never come

Should I be worrying about this stuff now getting more salary will only mean more tax.

Thank you
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1. Get used to it. We have a progressive tax system in this country. The more you earn, the more you pay in tax. If you want to reduce how much you pay in tax, the simplest thing is to contribute to a pension, something you haven't done yet.
2. Unless you are of bad health, lead a very unhealthy lifestyle or are a drug addict, that day will come. And what will your lifestyle look like then? You will go from a lifestyle based on €90,000 as a 33 year old to €13,000 as a 66 year old. You get to retire when the State tells you you can retire and spend the money the State.

You need to start getting control of your finances and your future. Figure out what kind of future you want and what you need to do. Start by reading up a bit about investing and start putting your money to work.


Steven
www.bluewaterfp.ie
 
Paraphrasing what I saw on here once....you have life choices that have a financial impact. So how would you like your life to be and how can you finance that? Eg retire early, education for your child, one you have already mentioned is house purchase. This is where I would concentrate my energies.

It might be helpful to look at taxes as paying for certain things, eg early childhood care subsidies for your child, or later funding for school. Hospitals for you and relatives etc. Whether or not we are getting value for money is another question and it's certain that you may not benefit from some of those services and will proportionately benefit more from others in return.
 
I think instead on focusing on what you end up with and how much other gets, you could focus on what you have and what you are doing with your money.
You have a good income but what do you plan to do with it? What do you want out of it?
If you think that some other people have it easier than you in terms of money/job, no one stop you from changing job/skills.
 
Pension max out really is a no brainer, particularly so in your case where you resent paying tax. I get it.

Regarding the house purchase; you mentioned you are housesitting your parents place. Is this an enduring arrangement? If it is I'm not sure why you are looking to change that up.

Another point that may be of interest to you as a Singleton is that you may take in lodgers in your home, rent a room to them & harvest tax free rent up to 14k every year.

Overall you seem to be in good shape financially but it does make sense to act on the pension now IMO .

Good luck!
 
I feel for you @solarman2022. You work hard, get your career path sorted and you earn the reward of a good well-paying job at an early age. All the classic things that society should be encouraging. Sadly, in Ireland we reward this responsible and socially beneficial behaviour with eyewatering personal income tax rates. Basically the government is confiscating a third of what you earn and it's not getting any better soon. On top of all that, if you do manage to save some money, you face even more taxes like DIRT, CGT and deemed disposal.

So what can you do?
1. As a number of posters have pointed out, the pension is an absolute no-brainer. Put in the max allowed for your age limit and if you can persuade your employer to chip in too, all the better. You can't afford not to do this. You save a load of tax and your pension grows tax free within the pension plan.

2. Buy a house. The sooner the better. Even if you don't need it. The more expensive you can prudently afford the better. Once it's your PPR any increase in value is tax free plus you can do rent-a-room if you really want to.

3. Learn about investing. Follow @Steven Barrett here and heed his advice. Learn about the advantages of a diversified equity portfolio for long term growth. Learn about EIIS investments and funds and see if the risk/reward profile appeals. Consider a self directed pension fund and perhaps use it to buy a second house. This is harder than it used to be but still possible.

4. Perhaps pay for independent financial advice. Good advice doesn't come cheap but should pay for itself. Avoid commission based advisors.

5. Finally, you are right to be angry about the high tax rates you face. Email your TDs, senators, and Dail candidates regularly to complain. If enough people did so, we might get somewhere.....
 
solarman2022 said:
Basically Im 33 on a 90k salary unmarried with 1 dependent. At least 30k is being taken by revenue. It makes me sick that I work my ass off to earn this salary and I don’t get to see much of it less qualified people can be taking home more than me in some jobs.
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its amazing there are not more people in Ireland like yourself up in arms about this.
You could move to UK or NI , probably cheaper housing, free healthcare, lower taxes, best of all you can open an ISA a personal investment account and get tax free capital gains outside of pension, unavailable in Ireland
Also I think you are allowed £12000 CGT tax free allowance every year and dividends from UK companies also tax free.
Maybe a move to NI could be an option, Im serious the tax situation for people like yourself in Ireland is truly dreadfull

Also a big factor in why we are getting it so hard to get builders now, the big factor since the crash is the extra taxation as a result of USC which creams of more tax from these guys, so they all up sticks and head to Aus Canada or UK
 
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Thank you guys some great knowledge shared and information ….. some not so useful …. Guess you will always get those ppl ….. I know I’m in a good position and paid well and I have and do work very hard for it I just wish there was a way to see more of it ……

I think I will go down the pension route for sure and look at a savings fund

Do vested shares in the company help in any way ????
 
interested21 said:
There are things you could do to optimise your financial situation for sure, but IMO the first thing you need to change is your psychological perspective on things.


At 33 you are earning significantly more net than the average person in the country earns gross. Your salary at 33 is the at or well above the pinnacle of many career paths. I'm sure you have worked hard to be where you are, but you are doing well financially now.

There will always be people earning more than you. Comparison is the thief of joy.

Based on your salary and savings, you can well afford to buy a house without putting yourself under major strain. Your impediment again is your perspective and your perception of the "value" of property at their current prices. When I bought in 2017 people were saying the same thing - housing is overpriced. Anyone who held off then waiting for better value has watched prices rise double-digit percentages each of the 6 years since, nevermind the financial and personal cost of renting in the meantime.

Have you a level in mind that you perceive there to be "value" in the housing market?


Do you have a particular reason you believe you won't live until 50 (the age you can technically start drawing down pension funds)? Do you have a scenario in mind where a diverse and passive equity investment would lead to you "losing it all"? Again, I think your perspective needs to be ammended here. People could advise specific products to you but until you are mentally bought in to the idea of saving for retirement I don't see you committing to a strategy.

Focus on what you gain rather than what you lose. You'll get to keep half of all additional extra pay. It'll also increase the amount you can contribute to your pension, and the benefits to mortgage affordability.
Click to expand...
Thank you
 
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