Is Our Retirement Plan Feasible?

L

Lillywhite22

Registered User
Messages
16
Personal details

Age: 52
Spouse's age: 48
Partner's age if not married:

Number and age of children: 19, 16, 14


Income and expenditure
Annual gross income from employment or profession: €135k
Annual gross income of spouse/partner: €53k

Monthly take-home pay: 8,800

Type of employment - e.g. Employee or self-employed.
Employer type: e.g. public servant, private company.
Both public servants

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving approx. €1,750 per month


Summary of Assets and Liabilities
Family home value: 380,000
Mortgage on family home: 160,000
Net equity: 220,000


Family home mortgage information
Lender: Avant
Interest rate: 3.8
Type of interest rate: tracker, variable, fixed. fixed for 7 years
If fixed, what is the term remaining of the fixed rate? 6.5


Remaining term: (Original term is not relevant) 11.5
Monthly repayment: 1370

Other borrowings – car loans/personal loans etc

Car loan - €19,000 outstanding - €430 pm for 4 more years

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

Pension information

Value of pension fund:

Public sector pensions (pre-2013) with 21 years service (me) and approx 6 years service (spouse). In addition, I have a small pension fund that my employer pays into (its a secondment arrangement whereby I receive a top up on my public sector salary which is pensionable). This will have a fund of about €150k when I am 60.

Other savings and investments:

College Fund of €30k attracting 3% interest, Savings Plan with c. €10k, Rainy day credit union account with approx €10k


Other information which might be relevant

Life insurance: €200k joint life, Group Life Scheme via employer - pays twice annual salary

Oldest son is in first year of college at the moment. He lives at home and has a part-time job so minimal cost to us. College fund and savings plan are with a view to potential post-grad and child 2 and 3 college costs.


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

We are hoping to both retire when I am 62. At that stage I will have 30 years service - so 3/4 of a full public sector pension. Between my public sector pension and my wife's actuarially reduced pension we expect to have an annual pension of c. €55k gross. My wife will also be eligible to claim the state/supplementary pension of €14k when she is 65. I am currently paying into an AVC to maximise my pension lumpsum. So between the two of us we will have a tax free lumpsum of about €235k in today's values.

At age 60 our current fixed rate on our mortgage expires and we expect to have a mortgage balance then of about €60k. What we are thinking of doing is using the small private pension fund (c. €150k) to clear this balance. This would mean taking 25% tax free lumpsum plus a taxable lumpsum to clear the €60k - leaving just over half of the fund. What we will do then is try to live off my wife's salary for two years and save mine to add about €65k to our lumpsum to bring it to €300k. My wife's salary is approx the same as what we will get in our pension - so it will help us adjust to the new income level.

Does the above represent a sensible plan - Or are there any better ways of getting where we want to get to?


Many thanks in advance!
 
It’s madness to have savings and non-mortgage borrowings at the same time.

You’re effectively borrowing to save.

Clear the loan and then you’ll have around €2,200 spare per month to save and potentially look at enhancing your pension provision with Notional Service Purchase or AVCs.
 
S class said:
Both of you should sign on for jobseekers benefit when you retire. Continue signing on for jobseekers credits when your JB expires.

This will give both of you a chance to qualify for Benefit Payment 65.

The extra few years of credits could be useful to you of you are short of 40 years of contributions at retirement.
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But we won't be looking for and available for work?
 
S class said:
Both of you should sign on for jobseekers benefit when you retire. Continue signing on for jobseekers credits when your JB expires.

This will give both of you a chance to qualify for Benefit Payment 65.

The extra few years of credits could be useful to you if you are short of 40 years of contributions at retirement.
Click to expand...

But are they not part of the integrated pension scheme (i.e. pre 2013) so their pension includes the state pension, no? They can't claim an extra state pension on top as it is already part of their occ pension?
 
Gordon Gekko said:
It’s madness to have savings and non-mortgage borrowings at the same time.

You’re effectively borrowing to save.

Clear the loan and then you’ll have around €2,200 spare per month to save and potentially look at enhancing your pension provision with Notional Service Purchase or AVCs.
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Fair point. Mind you it's hard to use up your savings with a kid just about to start college.
S class said:
Read the situations vacant page in a newspaper and you are looking for work.
If you are unemployed, resident in Ireland and not otherwise engaged, as in full time carer for instance, you are available for work.
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Actually that's not true at all. If you're registering for Jobseekers allowance you are declaring that you are actively seeking work. I don't intend to look for work after retiring! The rigmarole where public servants who are on an integrated pension need to register for Jobseekers Benefit in order to access their supplementary pension is a different matter entirely.
S class said:
I am not familiar with those pensions.

If a person has 30 years PS service, are just 30 out of a possible 40 qualification years for the contributory pension integrated into their PS pension ?

Would they have the possibility to gain an extra amount from the extra
10 years contributions ?
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No - that's not how it works. You are entitled to the full state pension. The balance in your public sector pension is dictated by the amount of service you have.
 
What do you plan to do when you give up work? Seriously. Finances are a huge part of the decision but I’m interested in knowing if you’ve put as much thought into that aspect of your plan.

g
 
garbanzo said:
What do you plan to do when you give up work? Seriously. Finances are a huge part of the decision but I’m interested in knowing if you’ve put as much thought into that aspect of your plan.

g
Click to expand...

Thanks for the interest but I'm here to ask about the Finances. Does anyone have any views on the specific question I asked?
 
I’m
Lillywhite22 said:
What we will do then is try to live off my wife's salary for two years and save mine to add about €65k to our lumpsum to bring it to €300k. My wife's salary is approx the same as what we will get in our pension - so it will help us adjust to the new income level.
Click to expand...
it would be simpler if you could explain what you expect income and expenditure to be between retirement age and 65

It’s not fully clear to me from the above.
 
Gordon Gekko said:
Given the rudeness of your response to Garbanzo’s very reasonable and sensible question, no.
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I agree it was rude but in a strange way I tend to understand and agree with the retort. All too often questions of this nature are met with ancilliary tangental questions that assume the OP's purely financial question is without consideration of context. I think it would be better if the OP's question wa sjust answered. The OP is perfectly entitled to reapond as they did. Rude as it may have seemed, it was 100% spot on.
 
To be honest I didn't think it was rude - apologies if it came across that way. I was genuinely thanking Garbanzo for the interest in my question - not being sarcastic. You could argue that it was rude to ask me about how my wife and I are planning to spend our retirement in the context of a request for advice about finances!
 
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Dr Strangelove said:
I’m

it would be simpler if you could explain what you expect income and expenditure to be between retirement age and 65

It’s not fully clear to me from the above.
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Our income will be c. €55k as we will have immediate access to all of our pension benefits - except for my wife's state pension which she will get from 65. In terms of expenditure, we will not have a mortgage or loans and our kids will be off the books (with any remaining education expenses paid from the savings fund). We plan to travel a few times a year and eat out occasionally - but nothing extravagant apart from that. Thank you.
 
I don’t think the question re plans was rude. Your response was a bit terse.

This board is about money but it doesn’t hurt to maintain a chit chat as well.

And it’s a reasonable question, oh you’re planning early retirement.. money aside got any interesting plans for that?

And it may be relevant…

If you’re planning to retire early and move to Spain or BVI you might glean useful advice re taxes etc here as an aside.
 
Lillywhite22 said:
Our income will be c. €55k as we will have immediate access to all of our pension benefits
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To me a gross €55k is sufficient for the kind of lifestyle you want.

Otherwise your plan regarding pension scheme and pay-off looks a bit overengineered given you are a decade off.

It’s probably no harm for your wife to have better pension coverage as well as your joint pension income will be a bit lopsided based on current plans. Baldly, she will be worse off if you predecease her and vice versa. Scope for AVCs and/or notional service for her.
 
Dr Strangelove said:
To me a gross €55k is sufficient for the kind of lifestyle you want.

Otherwise your plan regarding pension scheme and pay-off looks a bit overengineered given you are a decade off.

It’s probably no harm for your wife to have better pension coverage as well as your joint pension income will be a bit lopsided based on current plans. Baldly, she will be worse off if you predecease her and vice versa. Scope for AVCs and/or notional service for her.
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Thank you for that. If I predecease my wife she would be entitled to 50% of my pension under the scheme rules and vice versa. Good idea re AVCs for her - we will look into that.
 
An acquaintance of mine recently discovered that his scheme paid less than he expected as he was widowed. His wife wasn’t in the same scheme of course, he was aware that it paid a reduced widowed person rate but hadn’t realised it applied to him. The former employee. Thought it was only relevant if he died and his wife was looking to collect.

Just something worth checking.

What would be the income if either one of you died.
 
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