# How much is required to retire



## 45 and gone (9 May 2022)

Ok just gone 40 and I think im in a good financial position , married with 1 child

house - mortgage free valued @ €450k
cash savings €670k - 300k of this inherited
Pensions € 110k
Investments €130k
Farm land worth €350k  inherited
Wife pension €80k
Wife Savings €30k
Salary 85k + Bonus
we own both our cars approx €65k between both cars


----------



## PGF2016 (9 May 2022)

When your savings and passive income (dividends, rental income, pensions) provides enough to cover your cost of living now and in the future then you can probably retire. Many, many variables though.


----------



## PebbleBeach2020 (9 May 2022)

you have a salary of 85k and yet you have €1.63 million in assets (property/land/investments) and €190,000 in pensions and you are just 40 years of age??? I presuming you and your wife have both inheriting significant wealth from both of your parents?


----------



## 45 and gone (9 May 2022)

i have inherited 150k cash and the farm land worth 350k approx. just gone 42 now.  everything else we have both worked hard for for the past 20 years. ill be due to inherit from my parents when the time comes also this is not included in the above.


----------



## Farma1 (9 May 2022)

How much you need is a very open question - based on everything from if and how many children, what and how much money you need to spend to have the life you want etc  - could be anywhere between 1.5-4m depending! Theres plenty of good websites and forums based purely around FIRE and the calculators there will help you understand the range and what affects it. Clearly if the lifestyle you want costs 40k per year the answer will be very different to 80k per year! One of the often quoted figures is 25x your anticipated spending, but many will argue that it should be more cautions than this, especially with you being in your 40s - you could live another 60 years and who in 1962 would have been able to plan their spending requirements in 2022!


----------



## evil_g (9 May 2022)

45 and gone said:


> i have inherited 150k cash and the farm land worth 350k approx. just gone 42 now.  everything else we have both worked hard for for the past 20 years. ill be due to inherit from my parents when the time comes also this is not included in the above.


You saved €500k cash, and paid for a house worth €450k, over twenty years from a salary now reaching €85k?

So averaging €47k p/a from your after tax income? Ignoring mortgage interest and other assets you've acquired. 

Remarkable.


----------



## elcato (9 May 2022)

Way too little info above. Does/did your wife work ? Do you have kids ? Are you planning on selling PPR and moving ? How much do you spend pm ? Your pensions are way too low but your cash and assets are good.


----------



## k06351000 (9 May 2022)

evil_g said:


> You saved €500k cash, and paid for a house worth €450k, over twenty years from a salary now reaching €85k?
> 
> So averaging €47k p/a from your after tax income? Ignoring mortgage interest and other assets you've acquired.
> 
> Remarkable.


While not directly related to your question I find this baffling aswell. 

Obviously it’s your own business but very curious as to how this level of savings and assets was achieved


----------



## 45 and gone (9 May 2022)

started working when 12 and worked 2 jobs for my early years, wife worked until we had our child.  I sold a house also inherited for 150k, the rest was worked hard for. 

no car loans or debts, a good saver


----------



## PebbleBeach2020 (9 May 2022)

45 and gone said:


> i have inherited 150k cash and the farm land worth 350k approx. just gone 42 now.  everything else we have both worked hard for for the past 20 years. ill be due to inherit from my parents when the time comes also this is not included in the above.


very strange scenario, i just assumed you inherited a load of cash because on a salary of 85 grand a year, the figures do not stack up.

How long have you had cash savings of 670k for?!!!!! Another crazy number and earning nothing in terms of interest for the last number of years. And that's on one salary, you don't say when your wife stopped working. You'd think when you got to €100k or €250k or €400k or €500k in cash savings, you might have said "come on here a second, what the hell am I adding to this cash pile for?!"

You've paid off a mortgage on a house now worth €450,000, saved €550,000 (€670k - €150k inherited + €30k (wife)) in cash and built up combined pension pots of €190,000, and bought two cars outright, lived and spent money doing so etc. Absolutely incredible. You should be giving talks lads.

I have no reason to doubt your honesty or figures, but this is one the strangest and head shaking posts I've ever seen on AAM


----------



## Allpartied (9 May 2022)

Your ability to save a very sizeable amount of capital, on a fairly modest salary, would indicate that you don't have an extravagant lifestyle . 
I get that , because spending big on holidays,  or desinger clothes,  or cars, or fancy restaurants is not everyone's idea of the good life. 
With that in mind, I would say you, probably, don't need a huge pension fund.  Unless you are planning to change that lifestyle, in retirement, you, probably have enough to retire in your mid to late 50's .    If you have , in the region of 1 million euros , that should give you 30k a year.   You will, presumably, qualify for the state pension at 66, so that adds another 13k per year.   Inflation might become an issue, but with the right investment advice your 1million should be able to keep pace, over the 30 or so years you would have in retirement. 
My own advice would be to front load some of that income, so that you can enjoy your active retirement years in your 60's or early 70's.  I've always thought that running a pension fund so that you get the same income at 60 and 85 is a poor choice.   Maybe you'll be skiiing down Mont Blanc in your 80's but its unlikely.  If you make it that far ( and more than half of us won't), you'll be living an even more modest lifestyle.


----------



## 45 and gone (9 May 2022)

I have invested over the years example 100k and got a return of 19% in 9 months, back in the day 100k on depoist with Anglo gave you 9% for 12 months, interest up front.

I like my cars have a nice a5 and 1 series, wife was on 55k when she stopped 3 years ago,
used to go skiing every year and a sun holiday, not afraid to enjoy myself

300k of the 670 is only is the last year from inhertinance ,


----------



## Allpartied (9 May 2022)

45 and gone said:


> I have invested over the years example 100k and got a return of 19% in 9 months, back in the day 100k on depoist with Anglo gave you 9% for 12 months, interest up front.
> 
> I like my cars have a nice a5 and 1 series, wife was on 55k when she stopped 3 years ago,
> used to go skiing every year and a sun holiday, not afraid to enjoy myself
> ...



Well, in that case, I concur with the rest of the posters.  
You should set up your own website and tell us all how to do it.  

You certainly don't need any advice from me.


----------



## 45 and gone (9 May 2022)

Thanks!


----------



## PebbleBeach2020 (9 May 2022)

45 and gone said:


> I have invested over the years example 100k and got a return of 19% in 9 months, back in the day 100k on depoist with Anglo gave you 9% for 12 months, interest up front.
> 
> I like my cars have a nice a5 and 1 series, wife was on 55k when she stopped 3 years ago,
> used to go skiing every year and a sun holiday, not afraid to enjoy myself
> ...


What? You said you inherited the land valued at 350k and a house that you sold for 150k was inherited. Now you are saying that 300k of the 670k savings was inherited last year?

How much have you saved yourself and how much fell in your lap? Is the revised total that you inherited now 800k (350k + 300k + 150k)


----------



## 45 and gone (9 May 2022)

sorry if I wasnt very clear

total inherited €150k  cash and a house which sold for €150k also. totally 300k cash which is included in the 670k cash

farm worth 350k approx also


----------



## Clamball (9 May 2022)

So your total assets are worth 1775K

You have 1180K then you can use to build your retirement fund.  Say you retire at 57 and live another 30 years to 87, and your assets did not grow you would have €39K a year plus 2x€13K state pension if you are entitled to max from 66.  So can you live on €39K a year until 66 and then €65K a year for both of you?

You clearly have a flair for investment, so max out your pension each year and put some into high risk vehicles for you to grow your investment until you have to drawn down.


----------



## noproblem (10 May 2022)

45 and gone said:


> sorry if I wasnt very clear
> 
> total inherited €150k  cash and a house which sold for €150k also. totally 300k cash which is included in the 670k cash
> 
> farm worth 350k approx also


Clap on the back for you. Yes, you're on the right path and will have no problems retiring early unless you make a total cock up of everything. Just watch out for the grim reaper, he sometimes shows up uninvited


----------



## NoRegretsCoyote (10 May 2022)

Clamball said:


> plus 2x€13K state pension if you are entitled to max from 66.


For this dividend or rental income must exceed €5k pa for both spouses so PRSI gets paid. Otherwise no full state pension entitlement!

@45 and gone this will have to be a big part of your early retirement strategy. Will the farmland provide a rental income? Otherwise (and opinions differ on this) but an investment property which brings in net income of at least €1k a month would be a good use of your cash I think as it will mean you pay PRSI on the rental profits and build up state pension entitlement at 66. Two apartments outside Dublin at €200k each could gross you €40k a year if you are prepared to be a landlord. Splitting it over two properties means you still have income in the event of voids or a bad tenant.

Otherwise you've accumulated a lot of wealth but it's not best allocated for an early retirement strategy. You are far too heavy in  cash and too low in equities. Suppose you want to retire at 45. Maximise both spouses' tax-relieved pension contributions until then. You can then tap into the pension fund from 50.


----------



## Cervelo (10 May 2022)

NoRegretsCoyote said:


> For this dividend or rental income must exceed €5k pa for both spouses so PRSI gets paid. Otherwise no full state pension entitlement!


Or you can just make voluntary payments of €500 per year to the Dept of Social protection to claim the OAP 
Probably the best return on a yearly €500 that any of us could make!!


----------



## NoRegretsCoyote (10 May 2022)

Cervelo said:


> Or you can just make voluntary payments of €500 per year to the Dept of Social protection to claim the OAP


I'm not sure that's the best strategy.

The voluntary rate is 6.6% so the OP would be paying €5k-ish p/a based on his current salary until retirement. And it would preclude any earned or investment income.

On something like a €10k rental income he would only pay the minimum €500.


----------



## _OkGo_ (10 May 2022)

45 and gone said:


> Ok just gone 40 and I think im in a good financial position , married with 1 child
> 
> house - mortgage free valued @ €450k
> cash savings €670k - 300k of this inherited
> ...



Financially you are in a very good place. Like others, at first glance the figures were surprising but you've explained that you inherited €650k. You have a young child so you weren't paying for expensive childcare through your 20/30's. You are also at an age where you probably purchased your PPR pre/post boom so you paid a lot less for it than it is currently valued at. And until recently enough, you had joint income of €140k (+bonus) so it's not that surprising that you have accumulated this your wealth.  The only 'mistake' you have made is that your pensions could probably have been funded more over the last ten years considering the cash wealth you have built up.

But you haven't stated when you would like to retire or what retirement looks like to you. 
Is it 55 just for you or 60 for you and your spouse? 
Are there plans for a second child?
Will your spouse return to work soon or remain out of work to look after your child? 
Do you want to keep your (expensive) cars updated? 
Do you want to farm the land you've inherited?

All of the above will have a huge bearing on your finances so a clear plan for the next 10 years will set you on the right path

A side note, you have already inherited €650k, make sure you have paid all your CAT


----------



## Steven Barrett (10 May 2022)

45 and gone said:


> Ok just gone 40 and I think im in a good financial position , married with 1 child
> 
> house - mortgage free valued @ €450k
> *cash savings €670k* - 300k of this inherited
> ...


This should be reversed.


----------



## 45 and gone (10 May 2022)

i dont understand??


----------



## tnegun (10 May 2022)

I believe he's saying get the cash into investments as the value of cash will be eroded by inflation.


----------



## Steven Barrett (11 May 2022)

45 and gone said:


> i dont understand??


You have far too much cash on deposit. You should invest the amount you have in cash and leave on deposit the amount you have in investments. By using the growth of the capital markets on an amount like €670,000, you'll be alright in the long term. 


Steven
www.bluewaterfp.ie


----------



## NoRegretsCoyote (11 May 2022)

Steven Barrett said:


> You have far too much cash on deposit. You should invest the amount you have in cash and leave on deposit the amount you have in investments. By using the growth of the capital markets on an amount like €670,000, you'll be alright in the long term.


This is correct, but it should be done in the most tax-efficient manner.

What seems obvious to me is to stuff your own pension fund at least up to tax-relieved limits while you are still working.

After that it's not so obvious. For example ETFs have a pretty heavy tax treatment (deemed disposal).

I would take professional advice on this. I think you need to be careful in how you convert north of half a million euros from cash to another asset class. Pay someone a fee for this, not someone trying to sell you a product.


----------



## ashambles (11 May 2022)

NoRegretsCoyote said:


> I'm not sure that's the best strategy.
> 
> The voluntary rate is 6.6% so the OP would be paying €5k-ish p/a based on his current salary until retirement. And it would preclude any earned or investment income.
> 
> On something like a €10k rental income he would only pay the minimum €500.


I'd have read this 6.6% as being based on current salary only on year one? If that was the case - then it would seem the approach would be not pay the voluntary contribution in year one (not worth it - invest the money instead) and start in year two?

"If you paid PRSI at Class A, E or H you pay a high rate contribution of 6.6% of your reckonable income in the previous tax year, subject to a minimum payment of €500."





__





						Voluntary social insurance contributions
					

Voluntary social insurance contributions can help you qualify for a social insurance payment in the future. Find out more about making voluntary contributions.




					www.citizensinformation.ie


----------



## Steven Barrett (11 May 2022)

NoRegretsCoyote said:


> This is correct, but it should be done in the most tax-efficient manner.
> 
> What seems obvious to me is to stuff your own pension fund at least up to tax-relieved limits while you are still working.
> 
> ...


A discretionary fund manager won't invest it all in one day, they will invest it over a number of weeks/ months. They will also construct a portfolio of shares, unit trusts as well as funds, so deemed disposal wouldn't apply to most of the money invested. 


Steven
www.bluewaterfp.ie


----------



## sharkattack (11 May 2022)

With 679K sitting in a bank account the opening poster should seek and pay for professional financial advice.


----------



## NoRegretsCoyote (11 May 2022)

ashambles said:


> If that was the case - then it would seem the approach would be not pay the voluntary contribution in year one (not worth it - invest the money instead) and start in year two?


The wording is a bit ambiguous I agree. But I think the last year of employment is the anchor point.

My reading is as follows. OP retires on 31 December 2022 on a salary of €85k. He may then contribute until retirement at 6.6% of that €85k until he is 66.

I'm not sure if you could be strategic about it and retire at the end of January so as to have a very limited income in the anchor year.


----------

