Retire at 55, what do you think?

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Reni10

Registered User
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I am currently 45 and would like to retire in 10 years at 55 so I was wondering what people thought was the best thing to do to make that a reality?

I will give you where I am currently at with my finances and arrangements:

Age 45, Married, Father of 2 kids ages 9 & 11
Working full time with salary of €110k
Wife working part time with salary of €16k

Mortgage on Family home of €92k
Mortgage on overseas investment property of €100k, current rent from tenants mostly covers mortgage repayments

Current private pension of €225k
Wife current private pension of €100k
I am contributing 3% of my salary and my employer 6% into my pension
Wife contributing 6% of salary and employer 10% into her pension

Current Share holdings of €125k
Current shared Cash Holdings of €250k

Crypto holdings €10k
P2P Lending holdings €25k

No other loans or credit card debt and own both our cars outright.

Had previously invested in Insulation, Solar PV and EV cars for our home to protect against rising energy costs.

What do people think about retiring at 55 with the above in play?

Is there anything that I can do now to secure a good retirement standard over the next 10 years?
 
You and your wife both need to maximise your pension contributions for your age bracket, - 25% at 40-49 and avail of the full entitlement for the tax breaks and then the associated tax free returns in the pension.

You should also be using the cash to pay backdated contributions for the prior year.

How did you come to be sitting on 250k cash?

What rate are your mortgages? I would imagine paying off your PPR today would also make sense.
 
I think you would need €800K/1m in a fund to retire at that age. They you could take €200K tax free, which would leave €6/800K in the pot. Once you draw as far as I know, you must draw a min of 4% pa. I'm open to correction on that as a colleague told me you need not draw the 4% until 61. If that was the case, would the €200K keep you for 6 years? Probably.

Would €24/32K keep you in your standard of living? Probably not, given the ages of the children as they may still be in college.
 
Where would your income come from when you hit 55? You probably need to calculate this, against possible outgoing. In ten years your kids will be college going age. My expectation of kids at that age is that they will be as expensive as ever, possibly more expensive than ever. Would you have this factored in?
 
I agree with all the above .

Also , at 55, how many contributions will you have for the state pension ? I doubt if you will have 40 years , and if not, have you calculated how much your state pension will be reduced by then you get it at 66
 
huskerdu said:
I agree with all the above .

Also , at 55, how many contributions will you have for the state pension ? I doubt if you will have 40 years , and if not, have you calculated how much your state pension will be reduced by then you get it at 66
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A suggestion would be to take a small income from an ARF from age 55, increasing it to 4% per year from the year in which you turn 61. You'll pay Class S PRSI on ARF withdrawals.
 
I don't think you should plan to retire at 55. You can think about retiring, but you shouldn't be making sacrifices now so that it's possible to do.

If you don't enjoy your job, that is a more fundamental issue and you should look at doing something else. It might pay less but give you more job satisfaction.

Brendan
 
Reni10 said:
Wife working part time with salary of €16k
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50andOut said:
You and your wife both need to maximise your pension contributions for your age bracket,
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I don't know how married persons' pension contributions work.

Does she get tax relief at the top rate if she make a pension contribution?

Or does she get it at 20%?

If she is limited to 20%, it's more important that he makes the pension contributions so he gets the top rate tax relief.

Brendan
 
Brendan Burgess said:
You are borrowing €192k to put it on deposit at 0%!!!!

Clear both of your mortgages. That is the first step.

Brendan
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Indeed, makes absolute sense, it really amazes me why so many with excess cash, (more than they need), continue to pay a chunk of their pay at the 40 % tax rate, when there is an easy to access, convienient and low cost vehicle, to avoid at least several thousand in PAYE,- their DC Pension Plan.

Have a reasonable buffer of cash for sure, but concentrate on the Pension, a €60 cost, for every €100 invested, (assuming its affordable) is a deal you won’t get anywhere else.
 
Brendan Burgess said:
You are borrowing €192k to put it on deposit at 0%!!!!

Clear both of your mortgages. That is the first step.

Brendan
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I have my cash holdings earning 2% and my mortgages are approx 2.5%.

So it is nearly cancelling it out.

I also get tax relief on my overseas investment property so that is making money in the long run and being paid by the tenants rent at the same time.

If I continue to invest €10k a year into my pension and have also invested €10k into shares every year as well then I should have at least €350k in my pension and approx €250k in shares so that gives me approx €600k to play around with come 55.

I also have been working since I am 18 so by 55 will have made 37 years worth of PRSI contributions so I expect this will give my the full entitlement to the contributory pension at 66.

So I would have an 11 year gap to fill.

Both my properties will be paid for by 55 so I will have no debt at all and will also have approx €300k in cash so now I am nearing the €900k to €1mil by 55 in Pension, Cash and shares with zero debt.
My wife will also have her private pension and be entitled to the contributory pension at 66 as well.

So even will approx €1mil on hand and full state pensions for both of us people still thinki should invest more into the pension now and continue working past 55?

I also like my job but would probably like to go overseas to warmer climates again at 55 to retire and live a simpler and less expensive life.
 
50andOut said:
You and your wife both need to maximise your pension contributions for your age bracket, - 25% at 40-49 and avail of the full entitlement for the tax breaks and then the associated tax free returns in the pension.

You should also be using the cash to pay backdated contributions for the prior year.

How did you come to be sitting on 250k cash?

What rate are your mortgages? I would imagine paying off your PPR today would also make sense.
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€250k cash is from the sale of an overseas property that had increased substantially while we held it
 
Reni10 said:
I have my cash holdings earning 2% and my mortgages are approx 2.5%.
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Fair enough, but...

where are you getting 2% on a cash deposit? If it's an old fixed rate, that is ok. But otherwise you are taking some risk - possibly currency risk to get 2%.

And is it taxable?

Brendan
 
Reni10 said:
So even will approx €1mil on hand and full state pensions for both of us people still thinki should invest more into the pension now and continue working past 55?
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You are mixing up two separate issues here and you need to consider them separately.

What is the best way to save for your long-term future whether or not you retire at 55?

And the answer to that clearly is to maximise your pension contributions.

If you add up the numbers and you have enough to retire at 55, you should still maximise your pension contributions.

Part 2
If you invest in the most tax-efficient way, i.e. via a pension fund, you are more likely to be able to retire at 55.

Brendan
 
Brendan Burgess said:
Fair enough, but...

where are you getting 2% on a cash deposit? If it's an old fixed rate, that is ok. But otherwise you are taking some risk - possibly currency risk to get 2%.

And is it taxable?

Brendan
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Overseas deposit account but it is held in that warmer country that I will most likely retire to at 55 anyway.

In terms of maximising my pension contributions to get the best possible chance of retirement at 55 I have thought about that but I also like to be able to live for the moment too and make sure that the family have everything they need as well so by locking away 25% of my wages every month now to gain that tax break on the pension sounds good it may also mean that I can't afford to get that birthday present that crops up or go on that weekend away or whatever it is so I suppose what I was asking in this whole thing was for options to find that balance.

Have enough to retire with at 55 but not sacrifice the living that the next 10 years has too!
 
If you can't afford to max pension now, it doesn't bode well for affording early retirement.

What are your current outgoings?
What do you think they will they be in ten years?
 
SPC100 said:
If you can't afford to max pension now, it doesn't bode well for affording early retirement.

What are your current outgoings?
What do you think they will they be in ten years?
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I can "afford" to maximise contributions now but I do not want to sacrifice the now for the future if I did not need to that is the balance I am searching for.

Outgoings now are only standard household food and low energy bills.
1 low mortgage repayment every month.
A few family holidays every year.
Nights out and eating out but nothing too extravagant!

There is nothing else in terms of debt so I can easily put €10k aside for share purchases per year.

I think in 10 years time my outgoings will be much less.
Wont have any mortgages and will have rental income of about €20k per year from investment property.

Will also downsize and move to a warmer country so heating bills etc will be much lower again.

I would say at a guess I would have half the outgoings I have now in 10 years...
 
At 55 you would want to have an "active" retirement. That costs money.

My guess is you will also get bored very quickly unless you have hobbies/interests that can challenge you and keep yourself mentally fit.

I'd look at changing the work/life balance over a few years from age 55 so that when you do get to full retirement it is a natural transition.
 
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