# Planning for the future; financial advice please



## margaret1 (29 Jan 2013)

I have been doing a financial review recently and was wondering if it was possible to review our situation and perhaps give your opinion on the best way to plan forward. 
Age: 45
Spouse’s/Partner's age: 51
Childrens: 2 teenagers, college starting in 5yrs. 

Annual gross income from employment or profession: Homemaker
Annual gross income of spouse:  €50k plus €10k o/t
Monthly take-home pay €3000-€3400

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

In general are you: (b) saving and spending within our income. 
(a) spending more than you earn, or
(b) saving?

Rough estimate of value of home €300k
Amount outstanding on your mortgage: €135k (€955pm which Inc PDR, investment property & €100pm over payment) 
*What interest rate are you paying?*Tracker .75 plus ECB (1.5%)

Other borrowings – car loans/personal loans etc None

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 

Savings and investments: €100k in easy access accounts in different banks, interest varies to a max of 3%. €15k set aside within this amt for home improvements & €11k in case car change required instead of applying for a car loan. 

Do you have a pension scheme? Spouse only. Possibility for offer of early retirement package within 10yrs. 

Do you own any investment or other property? Yes. Purchased €100k, €35k left on loan, property possibly worth €75k currently. 


Life insurance: Duel Life Policy €100k 10yrs convertible, due for renewal with 12 mths €22pm
Mortgage Protection €135 15yrs self €13.50pm, spouse €42.78pm (loaded health history)
Spouse work linked Life policy €75k until age 65 @ €15pm
Other Info:
€30k Quinn Life (Euro Fund)
€5k Prize Bonds
€20k various shares, current value. Lost approx €14k in share value over a number of years. 


I used the wonderful spreadsheet on this website (thank you J29), and we seem to be spending & saving within the correct range with 4% margin to work within. It has taken us years to save what we have and we are not sure we are making it work the best possible way for us. Would it be possible to get advice in the following areas?

1). Should we review our Life policies, mortgage protection taking into consideration spouse age & also aware that we would like to be in a position in the worst case scenario to have the mortgage cleared and sufficient funds for 3 yrs. 
2) What areas could we improve on in making our savings work best for us going into the future taking into consideration we have future 3rd level college costs (8yrs of college yrs possibly in total).
4) Should we consider starting a AVC or PRSA or similar scheme to provide a better pension for both of us and avail of tax relief or have we missed the boat on that one. Spouse will have a defined benefit pension & 40yrs service. I will have a fairly modest pension from 10yrs service a lifetime ago. 
3) Taking into consideration that we are lucky enough to have a low mortgage rate, should we even be considering paying off some of the mortgage loan early. 

We would really appreciate any advice you can offer that could help us with our financial review and assist us in planning the best way we can for our future.


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## eirefinq (3 Feb 2013)

margaret1 said:


> Spouse’s/Partner's age: 51
> 
> Annual gross income of spouse: Homemaker
> 
> 4) Should we consider starting a AVC or PRSA or similar scheme to provide a better pension for both of us and avail of tax relief or have we missed the boat on that one. Spouse will have a defined benefit pension & 40yrs service. I will have a fairly modest pension from 10yrs service a lifetime ago.


 
How will your spouse who is aged 51 and a homemaker have 40 years service on a defined benefit pension scheme?

You definately need to start making use of the very generous tax reliefs available for pension contributions. Speak to a financial adviser about your options.


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## margaret1 (4 Feb 2013)

eirefinq said:


> How will your spouse who is aged 51 and a homemaker have 40 years service on a defined benefit pension scheme?
> 
> 
> You definately need to start making use of the very generous tax reliefs available for pension contributions. Speak to a financial adviser about your options.


. 

Thank you eirefinq, I had mis typed and have amended the details which makes more sense now. Spouse is 51, earning €50k plus o/t & will have 40yrs service on d/b pension when retirement arrives. I am the homemaker.

Thank you also for good advice. I could make an appointment with a financial advisor with a bank/institution we have an account with or alternatively would it be better for us to try find an independent financial advisor?


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## Importer (4 Feb 2013)

Based on what you you have posted, I suspect that you have little to learn from an Advisor. You seem to have all the bases covered already..........


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## eirefinq (5 Feb 2013)

margaret1 said:


> Do you have a pension scheme? Spouse only. Possibility for offer of early retirement package within 10yrs.


 
ok so its your spouse that is working full time with the DB scheme, that makes more sense!! Your husband will have the option when retiring (early or at Normal retirement age) of taking a tax free lump sum of up to 1.5 times his finishing salary. This is based on current tax rules for pensions and based on recent coverage of the govt's position on pensions seems unlikely to change for someone earning what your spouse does. 

It would be worthwhile considering aiming to have an AVC fund built up (making use of the very generous tax reliefs available on pension contributions) to cover this. If your spouse doesn't, the option of a tax free lump sum will still be available but if taken will have a negative impact on the yearly pension that will be available - it will be lower). 

Also if early retirement is offered it generally means a penalty will be applied to the pension. 

Food for thought...

Re the AVCs I would get your husband to talk to his HR/Payroll dept for further advice in the 1st instance or talk to colleagues either...

Alternatively an independent financial adviser could also be considered....

Sorry I have only touched on some of my views of how you could put your money to better use.....

One other point would be to consider using a portion of the savings to clear the mortgage on the rental property? If the interest rate you are getting on the deposit is less than the interest rate you are paying on the mortgage you are loosing money every month effectively....

Again food for thought, it is ultimately your decision....!!


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## Gerry Canning (5 Feb 2013)

Suggest,Under 1.... re-check all insurance policies, whilst most people under insure some have more than they need. In particular on anything that {seems} to give good cover on critical illness,protection cover. My experience is that when you claim ,you find your insurance is not comprehensive but a poor 3rd party.
Under College. Having had the {joy} of 4 through college , YOU will need that ready cash.
By the time we get to pension {me} and kids educated ,any pension over state-type is nearly free income so if you have free funds AVC is good , that said my AVC ended up with the current market turmoil not much better than saving !! You look in good shape , CONGRATULATIONS


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## margaret1 (11 Feb 2013)

Thank you so much eirefinq, importer & salmon9077, your advice is really appreciated. 


We have received information on AVC through husbands work broker and it looks pretty straight forward & makes sense for the tax benefits alone. You are correct salmon9077 that in the current market while it may not increase any more than savings, I suppose it would have to reduce alot of deplete the tax benefits gained. 


We will also review Life Policies,while I think we have sufficient cover, we are paying a high premium for it and our cover is for death only & does not inc any critical illness.


We possibly may reduce the mortgage on the rental property (by 30%) ok as the savings interest on that portion is only 1.25% and the mortgage is currently 1.5%, something to consider as Im nervous we'll have to take out a more expensive loan in the future to fund college etc. As an alternative, we may look at is placing that savings in a higher interest a/c as once its earning more than the cost of the mortgage interest it may make more sense. We will look at the best buys section.


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