39yo with mortgage paid off, pension AVCs maxed up, looking ahead

R

RobinMx

Registered User
Messages
12
Personal details
Age: 39
Spouse’s/Partner's age: N/A

Number and age of children: N/A

Income and expenditure
Annual gross income from employment or profession: €80,000

Monthly take-home pay: €3600

Type of employment: Private sector

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving.

Summary of Assets and Liabilities
Home worth €260k, just paid off in January
Cash of €10k
Defined Contribution pension fund: €125k

No other borrowings.
Credit card balance paid in full every month.

Other savings and investments

Do you have a pension scheme? Yes, through work. I've been slowly increasing the AVC % over the years and finally reached the max allowed for my age last year.

Do you own any investment or other property? No

Other information which might be relevant

Life insurance: None, also cancelled the mortgage protection since I don't have dependants.

What specific question do you have or what issues are of concern to you?
I just finished paying off my KBC mortgage 15 years ahead of time thanks to the fantastic AAM advice (I didn't realise you could overpay beyond the 10% limit. In the end, I only paid about €50 worth of penalties over 6 years, for over €140k of overpayments. Really grateful to the knowledgeable people sharing their wisdom here.)

My current plans are to rebuild my savings and look into energy home upgrades to future-proof the house and reduce my monthly expenses further, ideally paid for without financing. (Looking at insulation and solar PV at the moment.)

Next year will be my 40th birthday and I plan to increase my AVC to the max then as well.

My goal is to reduce my work hours in the next few years once the upgrades are out of the way, so I can pursue other personal projects and relieve the pressure on a health issue that's causing me trouble.

Any suggestions on what I might be missing or want to look into? I'm not sure if there are other types of insurance I should research. If I understand correctly, income protection doesn't work for part-time employment and wouldn't cover the pre-existing health condition that's most likely to cause me problems down the line. Investing probably doesn't make sense while I have big expenses coming up, and I don't understand it well yet.

I doubt I'll want to move any time soon. The house is small with no room for extensions, but I'm happy where I am and it seems reasonably possible to adapt it if my health issues get worse. Also, the PMAR stuff was a nightmare the first time around and I'm not sure I could get mortgage protection on my own again.
 
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RobinMx said:
My current plans are to rebuild my savings and look into energy home upgrades to future-proof the house and reduce my monthly expenses further, ideally paid for without financing. (Looking at insulation and solar PV at the moment.)
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Hi Robin

Glad you got useful information on Askaboutmoney.

I don't think you need to wait until you do it without financing. There really is no harm in borrowing for cost-saving work like this. I imagine that the energy bills saved would well exceed the interest on the loan.

And you have shown that you can overpay your mortgage very quickly.

Make sure you are in a Credit Union as that might be the cheapest source of finance for this. But shop around at the time, you do the upgrade.

Brendan
 
RobinMx said:
I doubt I'll want to move any time soon. The house is small with no room for extensions, but I'm happy where I am and it seems reasonably possible to adapt it if my health issues get worse.
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In which case, maxing your pension contributions is the right idea.

However, if you start thinking of moving, then you should stop the pension contributions and start building up a fund, given the difficulty you might have in getting life cover. Again, having a credit union account would be no harm here. It's unlikely to help, but you never know.

Brendan
 
Thank you for the advice. I'll have a look at the financing options, it seems there are "Green" loan offerings with decent rates that could be applicable. The Credit Union sounds like a good idea as well. All of my accounts were with KBC and I haven't properly looked where to set up everything next, once I had the current account sorted.
 
Brendan Burgess said:
I don't think you need to wait until you do it without financing. There really is no harm in borrowing for cost-saving work like this. I imagine that the energy bills saved would well exceed the interest on the loan.
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I agree with this. There is no harm in having debt for capital projects, it is how the world works. Having too much debt is the issue. If you can get the work done now with a loan, get it done. Prices are expensive for building work now but don't expect them to fall back to pre 2020 levels, inflation doesn't work that way.

Your biggest risk is your health issue and being unable to work due to it. As you said, you won't get income protection for it so you will have to self insure. You should look at building your emergency/ cashflow fund. If you are unable to work, you will have state disability and that is it. Thankfully, you don't have a mortgage to pay off but you will probably need additional income. Look to building up reserves. It doesn't have to be in cash, it can be in investments too.

there's not much more you can do on your pension, you are already maxing out there.


Steven
www.bluewaterfp.ie
 
imalwayshappy said:
Congratulations Robin, can I ask how can you overpay your mortgage over the 10%? Thanks
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Thank you. I just sent the extra money the same way as any other overpayment, and occasionally got a letter back from the bank talking about a small penalty, if I understand your question correctly.
Steven Barrett said:
Your biggest risk is your health issue and being unable to work due to it. As you said, you won't get income protection for it so you will have to self insure. You should look at building your emergency/ cashflow fund. If you are unable to work, you will have state disability and that is it.
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Thank you for confirming. I'm hoping it doesn't go that way but this is a big reason why I'm looking into ways to reduce monthly expenses while I can afford it. I take both you and Brendan's point on loans making sense in some cases! I called a few companies to get quotes and their current lead times, and I'll get on with loan applications once I understand the costs. Appreciate the advice and thoughts.
 
Really sorry to hear about your health issues, I hope they won’t interfere with your life but you are prudent to plan and having stable accommodation is such a help.

If you were to become disabled is there other work that you could perhaps do from home that would allow you to work, even part time. I have no idea of your skills or interests but you may be able to supplement your income if you consider some training, investment in equipment, etc, now while you are in a good position to make the time/money investment that may help supplement your income or even be an outlet in something you are interested in, in the future.
 
RobinMx said:
Thank you. I just sent the extra money the same way as any other overpayment, and occasionally got a letter back from the bank talking about a small penalty, if I understand your question correctly.

Thank you for confirming. I'm hoping it doesn't go that way but this is a big reason why I'm looking into ways to reduce monthly expenses while I can afford it. I take both you and Brendan's point on loans making sense in some cases! I called a few companies to get quotes and their current lead times, and I'll get on with loan applications once I understand the costs. Appreciate the advice and thoughts.
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Thank you, yes. I know you can overpay by 10% but didn't realise you can just send additional funds on an ad hoc basis. Might try that... :)
 
You can call the mortgage team and request a quote for overpaying your mortgage. In most cases its a very small amount like 50 euros or so. We paid off the remainder of our mortgage (around 150k or so I think) and the cost was around 100 euros to break our term (2 years left of 5 year term)
 
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