Early 50s, saving but no clear financial plan, what to do next?

A

azerty

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Personal details

Age: 51
Spouse’s/Partner's age: 49

Number and age of children: 2 (17/14)


Income and expenditure
Annual gross income from employment or profession: 82000 (PAYE)
Annual gross income of spouse: 15000 (self-employed)

(a) spending more than you earn, or
(b) saving? We would probably be savers.


Summary of Assets and Liabilities
Family home worth €480k with a €100k mortgage

Cash of €180K (different accounts, some with better interest than others)
We have been saving consistently about €1000 a month

Defined Contribution pension fund: €290K (also have a small defined benefit pension)
Currently maximising contributions

Spouse pension: €50K

Company shares: €32k

Buy to Let Property worth €270K (no mortgage)

Family home mortgage information
Interest rate 3.5%

Other borrowings – car loans/personal loans etc
No other borrowing

Buy-to-let properties
Value: 270K
Rental income per year: 14K
Rough annual expenses other than mortgage interest : 3K

Other information which might be relevant

Life insurance: in work as well as a personal cover of 420K for the next 13 years

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

We are currently selling our BTL property.

At this point, we need a plan with the assets generated.

We accumulated quite a lot of cash over the past 3 years that wasn't really expected (covid year), while some expenses we had planned (extension/renovation of our family home) has not occurred and will not happen in the near future.

My question is: what to do next?
We are planning to pay our remaining mortgage and we also need accessible funds for kids' education.
We don't have any other specific plan or need.
As we have faced different periods of uncertainty over the years (unemployment, health issues), we are probably quite risk-averse.
 
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Pinoy adventure said:
Clear the mortgage on family home.
Off load the company shares and put towards kids education.
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Thanks. We are planning to clear the mortgage. But also to sell the BTL as at this point, we just find it doesn't make sense any more. Too many risks, too much trouble, questioning the long term management of the apartment block, CGT exemption. But then, we will have far too much cash.
Don't know what to do with that.
 
Could you add value/comfort to your home (improved insulation, windows, etc.)?

Your pension balances looks very light for your ages - are you sure you are maximising your tax-relieved contributions?
 
ClubMan said:
What do you mean by this?

If you don't need the money for anything specific for say, 5+ years, then at least consider putting some of it into a direct (shares) or indirect (e.g. unit linked funds) equity investment as it will most likely deliver the best returns over the medium to long term - especially if, as it seems, you have the flexibility to ride out any fluctuations/volatility along the way and in terms of when you cash in.

Also, don't forget to use some of the money to live life to your own preferences. :)
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The life side of it is also a question! We had so many bumps. I like to plan and I like security but I start wondering if we actually need to live life a bit more.
Sarenco said:
Could you add value/comfort to your home (improved insulation, windows, etc.)?

Your pension balances looks very light for your ages - are you sure you are maximising your tax-relieved contributions?
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House is relatively ok, 16 years. Insulated and updated (or in the process) in terms of comfort. I am now maximising my pension, over the past 3 years. Before, not, just what was needed to get the maximum company benefits. I have a couple years of a db pension. My wife doesn't contribute currently. Was a stay at home for a while. She has had a low income for the past 10 years. I think we don't know pension enough to like them!! Choose to invest in the rental at some point.
ClubMan said:
You mean it was your home for 7 years until you started renting it in 2021?
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No, we bought it in 2014. There was an incentive at this point.
 
azerty said:
Thanks. We are planning to clear the mortgage. But also to sell the BTL as at this point
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Could you create a summary of what your position will be after you sell the BTL and clear the mortgage, since you've already made those decisions. You might get more traction.
You're clearly in a position where education costs are already covered. Do you have any other upcoming expenses?
Other than saying your pension funding looks light, I can't see anything else obvious.
 
RedOnion said:

Property acquired between 7 December 2011 and 31 December 2014

This page explains relief available for land or buildings acquired between 7 December 2011 and 31 December 2014
www.revenue.ie www.revenue.ie
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RedOnion said:
Could you create a summary of what your position will be after you sell the BTL and clear the mortgage, since you've already made those decisions. You might get more traction.
You're clearly in a position where education costs are already covered. Do you have any other upcoming expenses?
Other than saying your pension funding looks light, I can't see anything else obvious.
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Once we sell and pay ourmortgage, we will have:
- cash 330k
- share 32k
- pension 340k
We still have to pay for the kids education. But in fairness, we are in Dublin so the current plan would be accessible university.
 
azerty said:
- pension 340k
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If you haven't already checked, make sure you know what the pension funds are invested in. Is it 100% global equities, or a mix of equities and bonds. And is there 'lifestyling' built in?
 
azerty said:
Once we sell and pay ourmortgage, we will have:
- cash 330k
- share 32k
- pension 340k
We still have to pay for the kids education. But in fairness, we are in Dublin so the current plan would be accessible university.
Click to expand...
No other big coming expenses. We have 2 cars that of course we change from time to time. We probably have 4 years left of the first one.
House in goodish shape. Redone everything in the past 2 years except a couple of room .
RedOnion said:
If you haven't already checked, make sure you know what the pension funds are invested in. Is it 100% global equities, or a mix of equities and bonds. And is there 'lifestyling' built in?
Click to expand...
My wife one has life styling. Mine are a mixed of equities with some risks for the biggest one. Need to check the smallest ones.
 
It seems fairly straightforward after you have sold the buy to let.

Pay off the mortgage
Max you pension contributions
Invest the balance in equities - you can always sell some of them to fund your kids' education or upgrade the house or whatever.

If you have equities you don't need any cash or emergency fund. You can pay for most emergencies from your income and if you don't have the income you can sell off some of the shares.

Brendan
 
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