Financial Advice Needed - 7 years on from last post

R

Rockyroad18

Registered User
Messages
39
Personal details

Age: 52
Spouse’s/Partner's age: 53

Number and age of children: 4 19/16/13/11


Income and expenditure
Annual gross income from employment or profession: €95,000
Annual gross income of spouse: €87,000 (including OT)
Children’s allowance €420

Monthly Take Home Pay

Type of employment: e.g. Civil Servant, self-employed
PAYE, Spouse Civil Servant

In general are you:
(a) spending more than you earn, or
(b) saving? Saving Me - 800PM. Spouse - Not sure - guess €300 PW


Expenditure
Where my money went in Jan & Feb this year (I'm showing this way as no one month is the same here and I started my spending diary back up so have exact figures.
Sinking Funds - €1370 (Xmas, holidays, back to school, TV licence, Gaeltacht, Grinds, Birthdays, Kids Classes, Bathroom Renovation).
Loan - Car - €300pm (will get rid of this in the next month)
Fixed expenses - €467 - Life Assurance €125, NetFlix, Internet €90 (remote area, need extra for WFH) Gomo, Bins, VHI €122, Spotify, Dog Insurance, Bank Charges.

General Expenses
Groceries €700 avg
Car (Electric €90 avg (incudes electricity, tax, insurance, parking etc)
Sports €300 avg (GAA, Soccer, Karate, Tennis - very active)
Medical €322 avg (Last month was €577 due to dentist, this month €175) There have been some injuries + few doc visits this year already)
Holidays/Birthdays/Events €723 avg (we paid deposits on holidays + 2 birthdays in this month - would have taken from sinking funds) Prob €200 next month
Clothes (Me) €100
School/College €723 (January expensive again due to TY trip having to be paid, TY Ball - normal should be €300
Eat Out/Takeaway €240 avg
House/Oil €455 (My share of Oil fill €200. Also had and unexpected expense). Usually would be €250 max
Kids €180 avg (clothes, cinema with friends, football gloves, Runners, school trousers etc
Misc €200 (transport to work, lunches, sweets, floor mats for weights, share of solicitor fee, dog)

€1821 came from my Sinking Funds to pay towards holidays, sports, school/college/birthdays

Where Spouse money goes monthly (Sorry this is so confusing!)
Mortgage €990
Mortgage Insurance €60
Property Tax €40
Electricity €350 per month (approx)
Car Loan €150
Cost of Car on road (Diesel, maintenance, insurance, tax etc €600 (high millage due to work & kids & where we live)
Oil €150
Groceries €250
Medical €60
Animals €60
Sky €45
House Alarm €30
Meal out/take away/ couple drinks €100
Kids €60 (time to time will give them a few bob or buy them shoes)
House - garden/fencing/tools/ €80
Sinking Funds - Holidays, big expenses €500
He would put the rest into savings but dips in when big expense come - Like something breaking down.

Summary of Assets and Liabilities
Family home worth €550,000 with a €55,000 mortgage
Cash of €70,000, (€8k of that in Credit Union)
Defined Contribution pension fund: €270,000, Spouse full Civil Service pension - still paying into this - no choice currently - that may change in the future. His pension is Index Linked.


Family home mortgage information
Lender EBS
Interest rate 3.25%
Type of interest rate: tracker, variable, fixed. Fixed
If fixed, what is the term remaining of the fixed rate? Approx 2 years left
Remaining term: (Original term is not relevant) 4 years left
Monthly repayment: €990pm

Other borrowings – car loans/personal loans etc
Car loan €9,100 (Credit Union) Me 4 years left
Car loan €6,000 (Credit Union) - 2 years left

Do you pay off your full credit card balance each month? No CC
If not, what is the balance on your credit card? NA



Other savings and investments:
Company shares : from old employer €65k vested. Big chance of company going public so want to hold onto them.
€6k in Revolut vaults for holidays/car insurance/ birthdays/Xmas/back to school etc - money going in and out all the time.

Do you have a pension scheme? Yes. Have 6 past schemes (worth approx €270k and currently paying into PRSA. €800pm, no company contribution.
Spouse has fully paid up civil service pension that he could draw down now but staying in employment until 60. Pension will pay out €700 before tax each week + €90k lump sum. (Index Linked)

Do you own any investment or other property? No

Other information which might be relevant. More than likely inheritance in next 10- 20 years. Not counting on but keeping in back of mind when thinking of how we live life today. Could be €250-500k.

Life insurance: Yes


What specific question do you have or what issues are of concern to you?
I posted here 7 years ago and a lot has changed since then. I’ve got older as has my spouse and kids (no surprise there). The pandemic saw me out of work for a while and reassessing my priorities.

I spent a number of years educating myself on money, getting rid of any debt I had and working to a tight budget to ensure I built some savings, my pensions and have vaults in my revolut packed for everything expected expense wise.

My husband never got onboard with sharing finances. (Still likes his shoes ). He very frugal though. We had a few tough years and could have easily split but in a much better place now and have our focus on aiming to partly retire at 60. (He has no choice then). I may have to work on a few extra years.

One child now in college (commuting 40k each way), one in TY (most expensive year!), one other in secondary and one still in primary. Only 2 in extra curricular classes now but not cheap. Oldest has part time job so costs me almost nothing but bus fair and I give her packed lunch most days. Other kids will be commuting to college and will have jobs too if all goes well! Oldest talking about maybe doing short Erasmus in 2 years which we would want to support. May be more of that in the future with others. Also Gaeltacht, Grinds and Braces! (Saving started for all these).

I have been in a job for almost 2 years that is unfulfilling but it’s not taxing on brain which I needed after pandemic. Possibility of securing a new role in coming months that would see income increase by €20-30k + better benefits especially pension contributions which I don’t have now. Obviously more stress but more full-filling and still lots of flexibility. No guarantee I get the job though.

I read the post on AAM recently about people not needing as high a pension pot as they think to live a good life and it really resonated with me.
I’m saving a lot between pension and cash (€1600 per month) and choosing not do some things because of the savings. (My husband saves separately).
We live fairly frugally and almost never spend money excessively - shop Lidl/Dunnes, takeaway maybe 3 times a month, rarely a meal out. Cheapest holidays we can find, Pennies/high street for clothes - when doing it for 6 it adds up though.

My kids are getting older fast and I want to have some nice holidays with them before they are gone. Also while I’m still healthy, fit & have energy. We make good money, have little debt, mortgage almost done, college isn’t as expensive as we thought it would be (TY much worse!).
I just want to make sure there are no big gaps that I’m missing?
Are we on track to retire at 60/62 do you think and are we ok to pull back on savings a little to have those nicer holidays with the kids?

PS - I know I need to get rid of my car loan. Plan to do so in coming weeks.

Thanks in advance for your time!
 
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Your net income is probably around 8.5k and you have a mortgage of 990 pm. You say that you saved 400 per month. So there is 7 k left for expenditure. I would not say that it's living frugally. (I didn't deduct the car loan there as they make no sense). Financially, it's also very difficult to assess as we have no idea of your husband's savings.
 
Premos said:
Your net income is probably around 8.5k and you have a mortgage of 990 pm. You say that you saved 400 per month. So there is 7 k left for expenditure. I would not say that it's living frugally. (I didn't deduct the car loan there as they make no sense). Financially, it's also very difficult to assess as we have no idea of your husband's savings.
Click to expand...
I will get a chance later to put in more detail on spending as have been keeping a log for last 2 months.
 
While I obviously appreciate that teenagers are expensive, I think you need a step change in your financial life if you are remotely serious about retiring at 60.

Put simply, you are not saving nearly enough.

The car loans need to go asap - I think you know that.

You could (and should) be contributing over €2,000pm to your pension - €800pm isn’t going to cut it.

Once you turn 55, 35% of your gross salary could (and should) be contributed to your pension.

Would you consider selling the shares and clearing your mortgage? That would free up cashflow to maximise your tax-relieved pension contributions.

Will you have made sufficient PRSI contributions to qualify for a full State Contributory pension at 66 or do you have a strategy in this regard?

Do you have a clear idea what your expenses will look like in retirement and how much you will need to put by to fund those expenses over a 30-year period?

I hope this post doesn’t come across as overly negative but it’s important to be realistic.

Funding an early retirement is hard and it requires real focus.
 
I started this post earlier while drinking my morning tea, and now that I return I find that @Sarenco has said much of what I wanted to say, only far more succinctly. But I'll finish and post it anyway !

Retiring early (say 62) and continuing to have a decent standard of living is probably attainable but will require focus as it does for most people, perhaps more-so in your case.

Consider this:

Assume that you are both to retire in 9/10 years. Your combined income is currently over €180kpa. Irrespective of your view that you live frugally, you have a certain standard of living now, how much will you be prepared to cut-back or compromise? For the four years from retirement at 62 to the SPC coming on stream when you are 66, you will fund your expenditure from your own resources. (apart from possibly 9 months of Jobseekers and 12 months of Over 65 benefit payment, €9k and €12k respectively, a one off of €21k). Overly simplified, the maths suggest that this is a major funding requirement in itself (i.e. €180k x 4 = €720k, less €21k and less €150k spouse pension = €550k approx). Whatever residual pensions you have will reduce this. I fully understand that you can live on a lot less; reduced tax plays a part, some of the children will have moved on, mortgage will be gone etc.etc. But cutting back on take aways doesn't sound like it will close the gap. It is a substantial funding gap and you need to do the maths. And that's without considering your pension requirements post 66.

Many couples at your age are close to "empty nest". You aren't. That's in no way a criticism, and it sounds like you are good parents and doing a commendable job. I mention this from a purely financial perspective. Many of your peers will have shed the costs associated with parenting and can divert the funds towards their pension. You will likely have these financial responsibilities for another 10 years, and quite possibly longer. And while it may all be on an even keel for now, there could well be bumps on that road. I'd see this as a very important consideration.

Pension fund. You have picked up on the sentiment in another thread "I read the post on AAM recently about people not needing as high a pension pot as they think to live a good life and it really resonated with me". It is undoubtedly the case that a couple (over 66) can live on the SPC and whatever residual pensions remain after lump sums and early retirement costs. And that some can do so and be content. This is a personal thing. There are many who would be quite miserable on that income level, especially while still healthy and wanting to lead a full and active life in their late 60s and 70s. You cannot rely on that sentiment. You need to go through this in detail and understand the implications for you, and decide if it works.

I'd echo the previous post that if you are to retire that early, you almost certainly need to increase your pension contributions to the revenue max, 30% now and 35% when you reach 55. While this sounds daunting, the cost of doing this after tax may not be as bad as it looks at first.

I realise that some of the above is quite blunt, as was the previous post. But you are clearly well able to think things through and understand the implications. I went through all of this when I was your age, working out the likely cost of my retirement, the difference between my then income and expenditure and my likely future income and expenditure based on various retirement scenarios. It appeared daunting at the time, but allowed me to plan and I did achieve my goal of retiring at 60, funding my retirement from my own resources (pension and savings) up to the SPC which should come on stream later this year. Doing this allowed me to set my expectations, decide what changes to my lifestyle I was prepared to accept, and understand and address the funding gap.

By starting now now you are giving yourself time to think through the options and decide what is best for you. I wish you good luck with it.
 
When you say your husband will get a pension 700 per week

Is that index linked or is that exactly what he will get

It sounds okay today, but hard to know what 700 will buy in 7 years time?

And if that's available now, does he still contribute? And that pension unaffected?
 
Premos said:
Your net income is probably around 8.5k and you have a mortgage of 990 pm. You say that you saved 400 per month. So there is 7 k left for expenditure. I would not say that it's living frugally. (I didn't deduct the car loan there as they make no sense). Financially, it's also very difficult to assess as we have no idea of your husband's savings.
Click to expand...
More detail added now.
 
Sarenco said:
While I obviously appreciate that teenagers are expensive, I think you need a step change in your financial life if you are remotely serious about retiring at 60.

Put simply, you are not saving nearly enough.

The car loans need to go asap - I think you know that.

You could (and should) be contributing over €2,000pm to your pension - €800pm isn’t going to cut it.

Once you turn 55, 35% of your gross salary could (and should) be contributed to your pension.

Would you consider selling the shares and clearing your mortgage? That would free up cashflow to maximise your tax-relieved pension contributions.

Will you have made sufficient PRSI contributions to qualify for a full State Contributory pension at 66 or do you have a strategy in this regard?

Do you have a clear idea what your expenses will look like in retirement and how much you will need to put by to fund those expenses over a 30-year period?

I hope this post doesn’t come across as overly negative but it’s important to be realistic.

Funding an early retirement is hard and it requires real focus.
Click to expand...
Thanks for your reply.
Yes my car loan will go in next month
At this time I might be able to put another €200 in pension but can't go more than that without impacting our current lifestyle which is not the highlife. I will certainly be aiming to put more in a couple of years when expenses drop a little and hopefully the job I am trying to get comes to fruition as that will pay a % of my salary into my pension and any extra I get in salary will be going into pension as well.
The shares could be lucrative and I really want to hold on to them.
Yes I have sufficient contributions for full state pension - I never took time off for parental leave etc. - always worked full time except for 2 6 month stints when I signed on.
I don't have a clear idea what expenses will look like - I do know we won't have a mortgage, mortgage protection, kids classes, kids clothes, kids phones, kids braces, kids grinds, kids gaeltacht/TY trips, college payments, less to pay for holidays, meals out etc etc.
My spouse will get approx €36,500 pa. I believe we would have a nice life on €50Kpa (not taking inflation into account)
Also as I said we will get inheritance just don't know what that looks like.
 
Freelance said:
I started this post earlier while drinking my morning tea, and now that I return I find that @Sarenco has said much of what I wanted to say, only far more succinctly. But I'll finish and post it anyway !

Retiring early (say 62) and continuing to have a decent standard of living is probably attainable but will require focus as it does for most people, perhaps more-so in your case.

Consider this:

Assume that you are both to retire in 9/10 years. Your combined income is currently over €180kpa. Irrespective of your view that you live frugally, you have a certain standard of living now, how much will you be prepared to cut-back or compromise? For the four years from retirement at 62 to the SPC coming on stream when you are 66, you will fund your expenditure from your own resources. (apart from possibly 9 months of Jobseekers and 12 months of Over 65 benefit payment, €9k and €12k respectively, a one off of €21k). Overly simplified, the maths suggest that this is a major funding requirement in itself (i.e. €180k x 4 = €720k, less €21k and less €150k spouse pension = €550k approx). Whatever residual pensions you have will reduce this. I fully understand that you can live on a lot less; reduced tax plays a part, some of the children will have moved on, mortgage will be gone etc.etc. But cutting back on take aways doesn't sound like it will close the gap. It is a substantial funding gap and you need to do the maths. And that's without considering your pension requirements post 66.

Many couples at your age are close to "empty nest". You aren't. That's in no way a criticism, and it sounds like you are good parents and doing a commendable job. I mention this from a purely financial perspective. Many of your peers will have shed the costs associated with parenting and can divert the funds towards their pension. You will likely have these financial responsibilities for another 10 years, and quite possibly longer. And while it may all be on an even keel for now, there could well be bumps on that road. I'd see this as a very important consideration.

Pension fund. You have picked up on the sentiment in another thread "I read the post on AAM recently about people not needing as high a pension pot as they think to live a good life and it really resonated with me". It is undoubtedly the case that a couple (over 66) can live on the SPC and whatever residual pensions remain after lump sums and early retirement costs. And that some can do so and be content. This is a personal thing. There are many who would be quite miserable on that income level, especially while still healthy and wanting to lead a full and active life in their late 60s and 70s. You cannot rely on that sentiment. You need to go through this in detail and understand the implications for you, and decide if it works.

I'd echo the previous post that if you are to retire that early, you almost certainly need to increase your pension contributions to the revenue max, 30% now and 35% when you reach 55. While this sounds daunting, the cost of doing this after tax may not be as bad as it looks at first.

I realise that some of the above is quite blunt, as was the previous post. But you are clearly well able to think things through and understand the implications. I went through all of this when I was your age, working out the likely cost of my retirement, the difference between my then income and expenditure and my likely future income and expenditure based on various retirement scenarios. It appeared daunting at the time, but allowed me to plan and I did achieve my goal of retiring at 60, funding my retirement from my own resources (pension and savings) up to the SPC which should come on stream later this year. Doing this allowed me to set my expectations, decide what changes to my lifestyle I was prepared to accept, and understand and address the funding gap.

By starting now now you are giving yourself time to think through the options and decide what is best for you. I wish you good luck with it.
Click to expand...
Thanks Freelance for your lengthy reply - I don't take any offence at all and appreciate the time you took to go through it.
The kids are a massive cost at the moment but each year after 2027 it will become cheaper as one moves off the payroll and others get older and get jobs, drop sports etc. I added example of my costs above for the last 2 months.
I know I am not paying enough into my pension - I started paying into a pension at 26 of my own batt so know how important they are. I hat that I'm missing the tax savings. Currently my salary is below where I was before the pandemic and so are my benefits so my contributions have reduced considerably. I plan to get them back up through salary increases and company contributions - I won't be staying in the company I'm currently with. I had to make some changes during the pandemic which allowed me to cope. Its time to get back on track.

I may need to work a couple of extra years to get the pension where I need it to be but I'm ok with that.
We will certainly not need €180k per year for 4 years - we just wont' need that and I think the reduction in costs of the kids, lower bills, no mortgage, no sports, 2 people going on holidays, 2 people for meals, 2 people groceries v 6 etc has to be taken into account.
We also have the option if we really wanted to to downsize at that time and I'd do that in a heartbeat to be closer to a town and have to drive less. Also we will have inheritance.
 
moneymakeover said:
When you say your husband will get a pension 700 per week

Is that index linked or is that exactly what he will get

It sounds okay today, but hard to know what 700 will buy in 7 years time?

And if that's available now, does he still contribute? And that pension unaffected?
Click to expand...
Yes Index Linked.
Yes he has to continue to contribute - no choice. He is loosing out but he has ability to make a great salary. Much better than if he retired and was doing something part time. We need the full time salary for another few years.
 
I spoke with my spouse and he filled in the gaps for me.
He has more savings than first thought and his loan is a bit bigger also.
I populated the first page with a lot more details of spending. January is a funny month for us as big outputs like birthdays, payment for holidays. etc. Every month is not like that.
Thanks for all the time you have taken in your replies to date.

From your advice so far I will be paying off my car loan. I will speak to spouse about paying off theirs (not sure they will).
I will look at the sums and see if I can pay a little more into my pension to avail of the tax incentives.
I will try to pull back a little on spending to do this.
I will be doing all I can to get that job!!
 
Rockyroad18 said:
I spoke with my spouse and he filled in the gaps for me.
He has more savings than first thought and his loan is a bit bigger also.
I populated the first page with a lot more details of spending. January is a funny month for us as big outputs like birthdays, payment for holidays. etc. Every month is not like that.
Thanks for all the time you have taken in your replies to date.

From your advice so far I will be paying off my car loan. I will speak to spouse about paying off theirs (not sure they will).
I will look at the sums and see if I can pay a little more into my pension to avail of the tax incentives.
I will try to pull back a little on spending to do this.
I will be doing all I can to get that job!!
Click to expand...
I’m sorry but you should be approaching this as a team, this thing of separate finances for a married couple with 4 kids is a nonsense. Good luck anyway, taking an interest and taking action are the most important things and you are doing that .
 
Blackrock1 said:
I’m sorry but you should be approaching this as a team, this thing of separate finances for a married couple with 4 kids is a nonsense. Good luck anyway, taking an interest and taking action are the most important things and you are doing that .
Click to expand...
Believe me I know that. However, I have tried many times over the years to change how we do things but to no avail. It has caused many rifts in our marriage and has almost been the cause of us splitting.
However, we are in a better place now and I have made peace with it. We are speaking about our future and have some dreams we would both like to achieve. We may not be sharing a bank account at this moment but we are making it work. Communication has improved 100% which is half the battle in achieving what we want to achieve.
 
I looked at your spending. It's actually very difficult to know what you spend because everything seems to be average and approximation (over 2 months) and you only have a vague idea on how half of the household money is spent. You initially mentioned 3 take out a month and now you include 240 per month and some more spend on this from your husband. Even your personal monthly saving has increased by 400 euros since this morning I would really suggest an expense diary to actually get a grip of your spending. To know what you spend is the basic thing when you want to take financial decisions.
 
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