# Next steps to retire by age 60?



## Dunelm (5 Oct 2021)

Age: 33
Spouse’s/Partner's age: 31

Annual gross income from employment or profession: 42,000
Annual gross income of spouse: 39,000

Monthly take-home pay: ~5,000

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

In general are you:
(a) spending more than you earn, or
(b) saving?
We would have been saving a small amount each month prior to this year , recently we have been spending more due to moving into new house and buying furniture etc. Hopefully can save at least 2,00 per month now without the cost of renting. 

Rough estimate of value of home €800,000
Inherited with CAT paid with by a section 72 policy. Were paying €1,400 per month in rent until recently.
Amount outstanding on your mortgage: 0
*What interest rate are you paying? N/A*

Other borrowings – car loans/personal loans etc - None

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

Savings and investments: 5,000 - prize bonds
16,000 - state savings products
25,000 - emergency fund in low interest AIB deposit account.
3,000 - credit union account.
5,000 - Investment trusts
2,000 - BRKB shares
700- Ryanair shares
500:  BOI shares  - both at lower prices than paid. 
2,500 - recently purchased US domiciled ETF (VT) with US Broker. considering selling due to recent update.

Partner , 10,000 in savings 

Do you have a pension scheme?
Yes - Public Sector Single pension scheme- not much earned to date - 3.5 years service.
7,000 - in Zurich PRSA AVC. Started recently and max contribution retrospectively paid for 2020.

Partner - occupational pension - currently worth about 5,000. She pays 5% which the company matches. This is max that they will match,

Do you own any investment or other property?
No other property - but would like to purchase apartment in partners home country, for personal use and the generate income through AirBnB 

Non salaried, 25% Director,  of family company which currently generates small profits but has substantial assets.  (prefer to plan my financial future independent of this- and then if this generates money in the future it will be a bonus)

Ages of children: None at this time.

Life insurance: None right now.


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## Steven Barrett (5 Oct 2021)

Why do you have a 1.5 times net income sitting in cash? You are in a very stable job that is recession proof, you have no mortgage and no kids. You don't need that much money in cash. You need to get your money working for you and it won't do that sitting on deposit. 

The big question is being able to access your pension from age 60. Will you be able to take an actuarially reduced pension from age 60. If not, there is no point in ramping up your AVCs as you won't be able to access them until age 65. You need to be plan for providing yourself with an income from age 60 to 65 when your pension is payable. You will also have to look then at possibly being short in PRSI contributions and not getting the full OAP. 

Starting point is to get some of that cash working for you and redirect that €1,400 a month into an investment plan so it grows. You have a great opportunity to grow your wealth by not having a mortgage. It is also very easy to spend that money instead and not be able to do things in the future, like retire at age 60. 


Steven
www.bluewaterfp.ie


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## Dunelm (5 Oct 2021)

Thanks for your response Steven - definitely have too much in cash. To be honest some of the things like the credit union account and prize bonds I have had for years and didn't even consider them until I sat down to write the post.  So already this has been a useful exercise just to claify how much I do have in cash,

11,000 of the state savings are in a long term product due to mature this month- so can definitely look at investing that when it matures.

I believe I can take an actuarially  reduced pension at 60- so the AVC contributions would hopefully cover a gap from age 60 to 68. 
Being short of PRSI contributions is definitely a consideration - have already spent some years abroad- am a teacher so could hopefully work as a substitute for a couple days a week to maintain these. Would probably need to get advice on this- but seems pointless right now- as whatever the rules are currently they are sure to change in the next 27 years. 

Definitely intend to invest at least the 1400 on a monthly basis.


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## moneymakeover (5 Oct 2021)

I did a quick calculation

*With initial balance of 7,500
And monthly contribution of 1000
And 6% annual appreciation*

You should have 844,000 in 27 years

Is that enough to retire?

Property investment sounds good too as that will give you more options allowing you to take more risk with your pension both before and after retirement.


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## Dunelm (5 Oct 2021)

moneymakeover said:


> I did a quick calculation
> 
> *With initial balance of 7,500
> And monthly contribution of 1000
> ...


Thanks -confident that 844,000 would definitely be adequate. 

The only thing would be that I couldn't put that much in my pension every year, and the tax woud be due if invested outside a pension meaning the 844,000 sum would be greatly reduced.
Then the issue of where to invest would also arise- iedally I would go with a very diverse ETF but would 41%tax and deemed disposal that would really eat into gains over time.


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## Dunelm (6 Oct 2021)

I guess part of the reason for holding so much cash was for the potential deposit needed for an apartment in the next couple of years.


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## Steven Barrett (6 Oct 2021)

Dunelm said:


> I guess part of the reason for holding so much cash was for the potential deposit needed for an apartment in the next couple of years.


If you are looking to buy an investment property, remember there is no rush. The property market is crazy at the moment (and not just in Ireland) and you are competing against people who will make irrational decisions in order to get their new home. Whereas you are looking to buy somewhere to make money. So you can wait. there's no rush.


Steven
www.bluewaterfp.ie


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## Thomas1 (6 Oct 2021)

If OP leaves existing employment at 60 intending not to touch the DB pension until 65, is there any way he can get the AVC balance out into a personal pension and then ‘retire’ to access it? DB would then be the icing then in 5 years time.


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## Dunelm (6 Oct 2021)

thanks again guys

True that there is no rush buying a property but think a good opportunity could arise in the next 12-18 months,

Pretty sure I can't access the AVC until I drawdown the pension. There probably are some other options for me here involving setting up another pension - but we will see.


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## Brendan Burgess (7 Oct 2021)

Folks

Get a sense of perspective here.

The OPs are 33 and 31 and you are all making assumptions about what the pension rules will be in 27 years' time. 

OP - while it is no harm to aspire to retire at 60, it should not be a consideration for you now.  In other words, you should not be doing without something you need or reasonably want now, so that some Excel spreadsheet tells you that you will have enough to retire on, in 27 years. 

You should have a general plan on how to maximise your wealth over the long-term.  But no more than that.


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## Brendan Burgess (7 Oct 2021)

Dunelm said:


> would like to purchase apartment in partners home country, for personal use and the generate income through AirBnB



Yes, you are in a position to do this.  But don't consider it as an investment.  If you are buying "a piece of the oul sod" for sentimental reasons, then you should reconsider. 

If you choose to invest in rental property, you would probably not choose that location. 

From an investment point of view 
1) Maximise your contributions which get tax relief at 40% - but  don't make any contributions that get only 20% tax relief 
2) Invest the balance in a diverse portfolio of equities 

With two good jobs, a public service pension, and €70k (?) in savings, a mortgage-free home worth €800k and a share in a business which might realise value at some stage, you are in a very good position. 

Relax and enjoy life.

Brendan


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## _OkGo_ (7 Oct 2021)

I would second a lot of what Brendan has said. The goal is not to retire at 60, your goal is to build long term wealth that gives you options in the future. You could both be in jobs at 60 that give you a lot of satisfaction and you may not want to retire. You might decide to ease into it gradually, who knows. 

You are also skipping some major life events that cost a lot of money. Generally speaking, you are likely to get married (if not already) and have children so in the next decade you will probably face childcare costs and the following decade face 3rd level education costs. Unless you are absolutely certain that these things won't happen then projecting forward to a retirement date is a guessing game

I would put more emphasis on your needs for the next decade. You have inherited a property worth €800k. I'm sure it has sentimental attachment but is it the right property or location for you. Is it older, expensive to maintain, too big for your needs? €500-600k would buy a very nice modern new build in most parts of the country. You could move into a more suitable property and free up a lot of cash at the same time for investing

I wouldn't buy a foreign property. Realistically how much time would you actually spend there? Managing an AirBnB remotely would be difficult. You would need to pay someone to operate it for you which would eat into any profit. If you want to stay there yourself, you need to choose the off-season so that you aren't impacting on it's ability to generate income. It would be a little pointless spending peak season in your own AirBnB. It would probably be cheaper and a lot less hassle to just rent an AirBnB anytime you want to visit



Dunelm said:


> Non salaried, 25% Director, of family company which currently generates small profits but has substantial assets. (prefer to plan my financial future independent of this- and then if this generates money in the future it will be a bonus)


I think you do need to factor this in. It may not be generating a lot of profits now but it is a substantial asset that you have and from reading your other thread, you stand to inherit more of the company. Understanding how you can use the company to take a salary/build a pension or eventually realize the value of your ownership will have a big impact on your plans. It is also another reason not to buy a foreign property considering this company has 10 properties.


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## Leper (7 Oct 2021)

Dunelm is trying to look 27 years into the future. I'm approaching my 70's and to be honest I can't look  accurately even 27 weeks ahead (no humour intended). There is so much that can happen in that 27 years I would agree with B Burgess that the OP should relax and enjoy life. Everybody gets a kick where it hurts and nobody gets out unscathed. It's how you handle these adverse situations that will define you.

You're ahead of the game so enjoy your life, don't score any own goals and appreciate what you have and I hope that day never comes when it appears all is coming down around your ears.  Believe me, I'm speaking from experience.

Somebody mentioned buying foreign property which may or may not augment your income. To ensure this works you have to work at renting out your property and after you pay taxes, insurance, maintenance, utilities, cleaning, advertising, replace damaged items (washing machine etc) you won't have a hell of a lot left over. Hand it over to a rental agency and you'll probably owe money at the end of every year.  I know many people who have holiday homes abroad and all of them will tell you whatever they get out of it, if anything is hardly worth their efforts. I can say the same for renting property in Ireland. If you do either of the two you must be cold and calculated as nice guys get hurt there.

My main advice to you is to work hard where you are employed and seek promotion along the way. It is good for your self esteem and will keep you grounded. And when your phone rings from number unknown, I hope it is good news.

Think about advancing your CV; would a suitable 3rd level course be of benefit to you? No pain, no gain!


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## Dunelm (10 Oct 2021)

Thanks everyone, some great advice and interesting perspectives here.

With regards the apartment abroad I think it probably is less of a financial investment and more of an emotional one. That said I think it is something very important to my partner to have the link to home and if it broke even each year or at least didn't cost us too much I think it would probably be worth it for us.

OkGo mentions  important life events- and when I told my partner about the great advice I got on here that was the first things she said too- getting married next year so apparently won't be much money left for investing until after that 

I am definitely including the company in my plans, hope to draw a salary and  set up a executive pension plan in the next few years. Only wanted to leave it out here as it complicates my situation, it's very much my fathers company at this point (even if I own 25%  on paper) - and I don't know all the finer details so thought it would be unfair to ask posters to . I would love to get some perceptive on my plan of taking a small salary soon and then increading this as I approach "retirement" - Maybe on the original thread is best so not to derail this too much
askaboutmoney.com/threads/inheriting-a-company-which-owns-property.223877/


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