# Kids raised, DB retirement but single income



## raisinette (1 Nov 2020)

Hi all,
  posted couple years back and very appreciative of help so this an update and re-assessment.

*Age:* 52
*Spouse’s/Partner's age:* 54

*Annual gross income from employment or profession:* €100,000 public sector
*Annual gross income of spouse: *€0 (disabled/never worked)

*Monthly take-home pay : approx €5000*
Spouse - €0
*Type of employment: *1 x Public Sector

*In general are you:
(a) spending more than you earn, or
(b) saving?* Saving

*Rough estimate of value of home:* €300,000
*Amount outstanding on your mortgage: €*0

*Other borrowings – car loans/personal loans etc:* €0
*Do you pay off your full credit card balance each month? *Yes

*Savings and investments:*
Cash: €100,000
Stocks & Shares : €3k

*Do you have a pension scheme?*
Yes. Defined benefit (pre-95) public sector w/ 30 yrs service currently. Will have 38y at age 60. No AVC/PNS at moment. OH has no pension.

*Do you own any investment or other property?* Yes, holiday home (SE Irl) value €250k, no mortgage.

*Ages of children:* 26,22,21

*Life insurance: *Some cover under income continuance cover. Work has death-in-service so lump sum (and half pension) at age 60 given if I die.

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

1. Would welcome retiring at 58/59 rather than 60 (actuarily reduced). Can fund AVC/PNS to achieve but ultimately pension income will be >€44k so hit marginal tax rate (+USC) thereby negating tax relief benefit of this. Unsure of retirement needs but estimate €40k net income should be sufficient? Looking at other *ways to boost pension/*retirement income. Have health issues that could raise its head and seriously impact quality of retirement, if not before (OH health also increasingly limiting).
2. €100k cash doing nothing (in bank). Prefer not to rent holiday home (been there). Looked at ETFs for the cash and okay with risk tho little concerned about security of discount brokers. *What to do with savings* as likely have another €100k before retirement (also lump sum of €140k) now kids are (mostly) finished college. One option perhaps loan to kid(s) for house deposit (in time).


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## raisinette (11 Nov 2020)

Bump!


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## Gordon Gekko (11 Nov 2020)

You are in decent nick financially.

Why is your €100k income only netting you, as a married couple, €50k a year when the first €45k is taxed at 20% (with some tax-free) if you’re not making AVCs?

I think you’re too quick to dismiss AVCs/service purchase “just ‘cause they’ll take you over €45k of taxable income”.

I’d look to maximise my scope for pension investment before investing in my personal name.


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## NoRegretsCoyote (11 Nov 2020)

Your spouse has no pension. On your death she will get half only of your pension, which will be a big fall in income. €44k/2 is still comfortably more than the state pension, but it would still be a big lifestyle change compared to now.

You might want to mitigate this risk by setting up her own pension fund or life assurance. That said, a valuable holiday home owned mortgage free is a useful cushion.


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## NoRegretsCoyote (11 Nov 2020)

Gordon Gekko said:


> Why is your €100k income only netting you, as a married couple, €50k a year



OP said net monthly income is €5k, so €60k annually which sounds about right for PS €100k gross.


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## Blackrock1 (11 Nov 2020)

is there not a state disability pension for the spouse ?


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## Gordon Gekko (11 Nov 2020)

NoRegretsCoyote said:


> OP said net monthly income is €5k, so €60k annually which sounds about right for PS €100k gross.



Yes, I misread it as €50k a year.


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## NoRegretsCoyote (11 Nov 2020)

NoRegretsCoyote said:


> Your spouse has no pension. On your death she will get half only of your pension, which will be a big fall in income. €44k/2 is still comfortably more than the state pension, but it would still be a big lifestyle change compared to now.
> 
> You might want to mitigate this risk by setting up her own pension fund or life assurance. That said, a valuable holiday home owned mortgage free is a useful cushion.



One option would be for you to use savings plus mortgage to buy a property, or let out the holiday home you have again.

If rental profits are >€5k each per annum your wife will pay a flat Class S PRSI charge of €500 but will accumulate contributory state pension entitlements, 52 a year. This would still take her to the ten years minimum needed for a partial contributory pension. If she has ever worked at all she will already have some Class A contributions too.

She may be entitled to credits for Home Caring as well. See here. I am not the expert on this but it might be worth starting a separate thread on if/how she can generate an eligibility for a partial contributory state pension.


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## gipimann (11 Nov 2020)

NoRegretsCoyote said:


> Your spouse has no pension. On your death she will get half only of your pension, which will be a big fall in income. €44k/2 is still comfortably more than the state pension, but it would still be a big lifestyle change compared to now.
> 
> You might want to mitigate this risk by setting up her own pension fund or life assurance. That said, a valuable holiday home owned mortgage free is a useful cushion.



It is also possible that the OP's spouse will qualify for the Widow's/Widower's Contributory Pension as well as the half PS pension based on the OP's PRSI, even if the OP is paying modified (reduced) PRSI contributions.  Widows/Widowers Contributory pension is one of the few schemes that modified PRSI payees are eligible for (and surviving spouses can claim on their own PRSI or their late spouse's PRSI records).





						Widow's, Widower's or Surviving Civil Partner's (Contributory)   Pension
					

A Widow's, Widower's or Surviving Civil Partner's contributory pension and related social welfare benefits may be payable if either the deceased person or their spouse/civil partner has enough PRSI contributions.




					www.citizensinformation.ie


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## gipimann (11 Nov 2020)

Blackrock1 said:


> is there not a state disability pension for the spouse ?


If the spouse doesn't have a PRSI record themselves, the only option is a means-tested disability allowance, which they would be unlikely to qualify for based on the OP's income.


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## raisinette (12 Nov 2020)

Blackrock1 said:


> is there not a state disability pension for the spouse ?


Yes, but it's means tested so upon marriage have received nothing, nor will on retirement.


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## raisinette (12 Nov 2020)

gipimann said:


> It is also possible that the OP's spouse will qualify for the Widow's/Widower's Contributory Pension as well as the half PS pension based on the OP's PRSI, even if the OP is paying modified (reduced) PRSI contributions.  Widows/Widowers Contributory pension is one of the few schemes that modified PRSI payees are eligible for (and surviving spouses can claim on their own PRSI or their late spouse's PRSI records).
> 
> 
> 
> ...


Yes, I expect that she will have that entitlement to Widow's pension should I predecease. This, with half PS pension and assets in the houses should suffice. I can't see a way of improving on her provision (if indeed needed as we're low maintenance!) other than put our savings to work in some way (perhaps ETFs but other funds have high AMC).
With disabilities, it's hard to contemplate returning to renting, esp in retirement.
We may need some savings to service loans to kids for say, a site purchase. Though worked hard to get here and looking for easier life!


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## LDFerguson (12 Nov 2020)

Have you got an estimate of how much of a lump sum and pension you'll receive if you retire at 58, including the actuarial reduction?  This might be an area where AVCs could help you out.


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## raisinette (15 Nov 2020)

LDFerguson said:


> Have you got an estimate of how much of a lump sum and pension you'll receive if you retire at 58, including the actuarial reduction?  This might be an area where AVCs could help you out.


Yes, taking actuarial reduced pension at 58 would give lump sum of €135k and pension of ~€42.5.
One option is to take carer's benefit/leave for, say, a year (or in two portions), and ease into retirement at 60 and avoid the actuarial reduction penalty. My wife's health isn't great and it would be good to take time out to help her (my work is very busy). Though my take-home pay would be impacted (and my service towards pension), it's an option we're considering.
Of course that still leaves a largish lump sum on deposit.


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## 50andOut (15 Nov 2020)

Hi raisinette

How much are you saving a month currently? Seems you already need less than the 5k a month as are saving and so €42k per annum might not be too far off your current expenditure. You have no mortgage and a holiday home, Plus at retirement you will have around €335k cash.

Seems like a very good situation, and not sure you need to change anything. the cash can supplement if needed any additional spending over and above the pension amount. If you should predecease the holiday home can also be sold topping up the cash reserve to make up any additional shortfall for your spouse.

At 6 year timeline, I would not be putting yr 100k anywhere else than a readily accessible location, suggest state savings certs are probably best option

50+o


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## raisinette (16 Nov 2020)

@50andOut Thanks for the reply. Yes, some savings at the moment though not much with kids finishing college there’s still some expense there. Probably going to take your advice with State Savings despite inflation winning against the low interest. Seems a shame there isn’t a better use for those funds.


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## NoRegretsCoyote (16 Nov 2020)

raisinette said:


> despite inflation winning against the low interest.



There has been very little inflation in recent years. Overall prices more or less the same as 2008.


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## ATC110 (16 Nov 2020)

Off topic question but what sort of job in the PS pays €100k?


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## NoRegretsCoyote (16 Nov 2020)

ATC110 said:


> Off topic question but what sort of job in the PS pays €100k?



Principal of a large school for example.

Principal officer or equivalent in civil service or local authority.


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## ATC110 (16 Nov 2020)

NoRegretsCoyote said:


> Principal of a large school for example.
> 
> Principal officer or equivalent in civil service or local authority.


No words..


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## Cricketer (19 Jan 2021)

ATC110 said:


> No words..


I don't know if you are familiar with the work of a school principal (and I don't mean in the way you're familiar with school because you went to one). Mrs. Cricketer has retired as principal of a large secondary school in the midlands where she managed nearly a thousand pupils and seventy staff, many of them ASTI members. There are no words for that either, but not in the way you meant. It was all-consuming and she earned every cent.


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## ATC110 (20 Jan 2021)

I don’t need to be ‘familiar’ as in having done the job myself to know that everyone has to work hard in whatever job they do however they often don’t have up to six months holiday, little accountability, a heavily taxpayer subsidised DB pension or are virtually unsackable.

No teachers were put on the EWSS or PUP in 2020 despite being effectively unemployed apart from ad hoc minimal lesson setting and remained on full pay.

PS salary levels are preposterously high and need to be corrected to rates similar to the UK and the pension scheme changed to DC, at the least.


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## Cricketer (20 Jan 2021)

ATC110 said:


> ...they often don’t have up to six months holiday...


This is going off topic so this is my final word on the subject: you need to educate yourself. In every sense of the word.


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## ATC110 (21 Jan 2021)

Cricketer said:


> This is going off topic so this is my final word on the subject: you need to educate yourself. In every sense of the word.


I'd prefer to believe what you're saying is true rather than knowing the facts.

 A principal has no power, they cannot discipline or sanction staff and are merely an overpaid figurehead


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