PS Pension

Discussion in 'Public sector pensions' started by Nordkapp, Apr 19, 2016.

  1. Nordkapp

    Nordkapp Frequent Poster

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    Have read through a number of threads and posts on the unknown unknowns in terms of what lies ahead for pensions and the amount to target for a comfortable existence.

    Our own situation is as follows, we are both PS employees, one not so recent and one with long service.

    Wife: 50 with 30 years service, can retire on cost neutral at 55 or leave pension till 60 preserved when the pension would 25k with a lump.

    Husband: 50 with 18 years plus service purchase (with other employment pension paid in), so at 65 husband will have 37 years, at 60 husband will have 34 years. Pension would be circa 18k for 65 or 15.5k for age 60 plus the OAP / supplementary pension. Lump sum is also available.

    There is one rental property yielding 10,000 /yr before deductions and taxes. Mortgage will be paid off when we are 60 yrs old. Own PPR will also be paid off.

    Joint income currently 120K, looking at the "extra 240 days annual leave" effect on what ever pension income we do get and looking at that magical 65% of retirement salary based on today's 120K equating to 78K of pension requirement.

    At 60 we would be targeting 42.6k + supplementary pension on husbands pension and including rental.

    At 65 we would be targeting 64.6K (including OAP pension due at age 66 currently and the rental income). This is the minimum target.

    Realistically how would we get to 78k? Should we even be targeting 78k or should we be targeting staying in the 20% tax bracket, €67,600?

    Main issue is Ireland is an expensive place, both of us see people we know personally have their DB pensions eroded as has been captured in the media, hence the rental property.

    To get us to a standard of living in retirement that allows us manage comfortably, assist the children / childrens children through covenants, travel and enjoy other pursuits that retirees generally do, the question is whether €67,600 (circa €51.6k net of deductions) or €78k (circa €57.7k net of deductions).

    Husband wants to use the lump to buy a rental to bring pension to avoid any future pension payment shocks and income close to 78K.
    Wife wants to put lump into AVC's.

    As we are age 50 with 1 to go to college in 5 years time and 1 halfway through we want to look ahead now and try and meet that target.

    What are people in general targeting in terms of income in retirement similar to ourselves, are they looking at the 20% tax threshold or a minimum income of 100K per year or more?
     
  2. trasneoir

    trasneoir Frequent Poster

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  3. Monbretia

    Monbretia Frequent Poster

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    That would be a seriously high salary to need in retirement with no debts left, you'd want to be living a fine high life to need anything like that. Obviously if you want to give your kids loads of money from your ongoing monthly income at that time then that's a different story but for ordinary day to day living it seems very high.
     
  4. Nordkapp

    Nordkapp Frequent Poster

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    Many thanks for that perspective. I think tying down our targets to ensure the mortgages are paid off is essential and adopting safety margin 1 to 6 of which we have elements of.
     
  5. Gordon Gekko

    Gordon Gekko Frequent Poster

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    In today's terms, €60k a year in pensions would be a lot.

    With the caveat re helping out the next generation, you'll probably never need more income than you do at the "young family/buying a house" stage.
     
  6. Nordkapp

    Nordkapp Frequent Poster

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    Unfortunately this is an expensive country to live in, one has to be ahead on the taxes and avoid those known knowns. The property market is a classic example, stamp duty rates to aid the market and stamp duty rates to prevent investors entering (compliments of Bacon 1/2).

    Will seek a financial review and see the lie of the land!
     
  7. Monbretia

    Monbretia Frequent Poster

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    I know it is, I live in it :) When working I was earning 65k, now I have around 20k p.a. and it's a little tight but if I had another 10k per year I would have tons, I doubt I would even manage to spend it all. But then again I am cheap to run and don't go in for expensive cars etc. I do like my holidays though.
     
  8. Gordon Gekko

    Gordon Gekko Frequent Poster

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    The idea of an ARF (post retirement fund) appeals to me from an estate planning point of view, because it can grow tax free and pass on to the next generation in a reasonably tax efficient manner. I would therefore be looking at your additional scope for AVCs rather than a property investment.
     
  9. Nordkapp

    Nordkapp Frequent Poster

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    Cheers Gordon, that would sound alot better as we want to divest from property not just for the peace of mind. There should be 10 to 15 years to fund an ARF so will look into that.

    Agree with you Monbretia, my father poured penny after penny into AVCs in the 80's to mid 90's. Looked at his income awhile back to check limits for HSE assistance for a HSE return and was surprised how low the pension was, luckily he has the OAP as well but the rental property makes a huge difference to his standard of living. I want to ensure I can ride out the tight spots! Cheers.