# Advice for the future - early retirement in mind!



## triplej (22 Jun 2020)

Age: 45
   Spouse’s/Partner's age: n/a

   Annual gross income from employment or profession: 72K + 19k widowers pension 
   Annual gross income of spouse: n/a

 Monthly take-home pay €4,900

 Type of employment: public servant

 In general are you:
 (a) spending more than you earn, or
 (b) saving? Saving; approximately €750p/m

   Rough estimate of value of home - €375k
   Amount outstanding on your mortgage: n/a 
*What interest rate    are you paying? n/a*

   Other borrowings – car loan approximately 9k

   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: approximately 195,000 in stocks/shares; 20K cash

   Do you have a pension scheme? Yes; public sector defined benefit scheme

   Do you own any investment or other property? Yes. Approximate value 200,000, mortgage of 75,000 (variable rate of 3.2%)

   Ages of children: 13, 11 and 6

   Life insurance: Yes, 400k with 125K serious illness in private scheme. Also serious illness and death in service benefit with work.


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

 I am currently trying to figure out how best to manage my finances to enable me to retire at 60.  After a few tough years, on a family level not financially,  I am turning my attention to the future for my kids and I.  I am in stable employment in the public sector and am mortgage free on my PPR. I have some assets in the form of stocks and shares which I plan to utilise to pay for the college years. I continue to contribute to this to the value of €500 per month.  However, I have realised that life is short and I don't want to spend it working into my 60's, I would prefer to cut my losses and live according to my means. I will qualify for almost a full pension (3 years short) at age 60.  I would appreciate any advice as to how best to manage my assets, etc. to achieve the goal of being able to retire aged 60 given that the children will then be adults even if they are still somewhat reliant on me financially to a greater or lesser extent.  Thanks in advance. TJ


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## goingforgold (22 Jun 2020)

I think financially you are in almost a perfect situation to retire in 15 years time. You'll have a very valuable pension , be mortgage free on two properties and have plenty in the way of stocks/shares/cash. How you invest your assets depends on the risk you want to take. You don't need to take risks as you are already wealthy, so you could live comfortably off pension and invest large cash sums in likes of state saving bonds.

You might also need to look at ways of potentially transferring money to your children in the future, for house purchases. Others can advise on how best to do that in a tax efficient way.

After that ensure you do what makes you happy in life, that really is the main thing...and thankfully you are secure financially so that gives you the freedom and maybe some more options to find that happy place or do what makes you content in life


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## Sarenco (22 Jun 2020)

I think you have too much exposure to equities to address expenses that are likely to arise in the next 5-12 years.

In your shoes, I would sell around €100k worth of equities to pay off the car loan and the mortgage on the rental property and I would put the balance in 5-year State savings certificates.  That would leave you with around €95k in equities and €35k in fixed income, with zero debts.

You are definitely on track to retire at 60 - no need to be overly aggressive with your investments.


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## triplej (23 Jun 2020)

Thanks for the replies. There is certainly some food for thought there. My original plan was to build up my equities in order to cover college expenses. 12k/year x 4/5 years x 3 children = 144/180k.  I had hoped that would leave me free to live off my lump sum (1.5 times finishing salary) plus my pension. 

I will look into the State savings scheme but the last time I looked the returns seemed very small.  I will investigate further.  Thanks again. TJ


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## Purple (26 Jun 2020)

When you retire you'll have a net income from pensions of around €32 a year plus your rental income. Therefore if you take Sarenco's advice (you should) you'll have no mortgage, an annual income of about €36000 (assuming €4k net from your investment property) and over €200k in the bank (€100k left in investments + €100 lump sum at retirement). You'll also have a €200k capital asset and a pension worth well over a million euro. 

Could you live on a take home income of around €700-€750 a week?


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## NoRegretsCoyote (26 Jun 2020)

triplej said:


> Thanks for the replies. There is certainly some food for thought there. My original plan was to build up my equities in order to cover college expenses. 12k/year x 4/5 years x 3 children = 144/180k.  I had hoped that would leave me free to live off my lump sum (1.5 times finishing salary) plus my pension.
> 
> I will look into the State savings scheme but the last time I looked the returns seemed very small.  I will investigate further.  Thanks again. TJ



College expenses will come very soon, especially for the older two.

I don't think the risk of staying in equities is worth the after-tax return for such a short time horizon.

I would sell the bulk of the shares and put it in state savings for each child about 5 years before college expenses are due to occur.


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## Gordon Gekko (26 Jun 2020)

I’m going through a detailed retirement planning exercise at the moment which I’m finding very useful.

The biggest takeaway for me is that we probably need a lot less than I would have thought.


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## Gordon Gekko (26 Jun 2020)

Take your mortgage, money you save regularly, childcare, schooling, pension provision itself, debt servicing, the actual cost of working (clothing, coffee, lunches, etc), and get rid of them.

What’s left behind is less than you’d think.


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## SPC100 (28 Jun 2020)

Gordon Gekko said:


> I’m going through a detailed retirement planning exercise at the moment which I’m finding very useful.
> 
> The biggest takeaway for me is that we probably need a lot less than I would have thought.



Any chance you would write up a seperate post on the process, method, calculations, and insights you gained?


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## SPC100 (28 Jun 2020)

45 to 60 is 15 years time frame. Op has early retirement goal. 

200k equity could double in value in that time which could facilitate even earlier retirement. selling it down now will have taxes.

- What Is profit from rental like and have you included it in your savings figure?

- Is 750 savings going 500 into equity and 250 into cash? It do you mean 750 on to of 500 equity savings?

What is car loan costing? What is interest rate?

Will kids need accomodation for college? Or will they live at home?

I think advice is a bit too conservative.

Kids college will start in 5, 7  and 12 years

Op is saving 9k cash p.a. in 11 years time (after first finished college) that's 100k cash. And his college outflow will only have been (4 yrs + 4 yrs) = 8*12k i.e. 92 k. I.e. he can build up about enough cash to put kids through college. If expenses are higher he can dip into equity.

I'd suggest
-Pay off car loan with cash.
-switch future savings to mostly cash
-investigate if you can buy back years to be ready for early retirement

I think you could retire a lot earlier than 60 if you planned and budgeted it.


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## SPC100 (28 Jun 2020)

Gordon Gekko said:


> Take your mortgage, money you save regularly, childcare, schooling, pension provision itself, debt servicing, the actual cost of working (clothing, coffee, lunches, etc), and get rid of them.
> 
> What’s left behind is less than you’d think.


Welcome to fire.


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## moneymakeover (28 Jun 2020)

I wouldn't change much in what you're already doing.

Figure out what you need for 3 students college years. Say 12k per year you mentioned
4 years.
3 x 12 x 4 = 144k
By the way, 12k seems high unless they are living away from home. 

Switch your savings into cash say 10k per year.
Including your 20k then in 12 years you will have 140k cash.
In time for youngest starting college.
Lock this away in state savings.

Keep your equity portfolio and add to it.
Pay down your investment mortgage over time.
Pay down car loan over time.


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## SPC100 (29 Jun 2020)

Gordon Gekko said:


> I’m going through a detailed retirement planning exercise at the moment which I’m finding very useful.
> 
> The biggest takeaway for me is that we probably need a lot less than I would have thought.





SPC100 said:


> Any chance you would write up a seperate post on the process, method, calculations, and insights you gained?



Thanks so much Gordon - I see you started a thread





__





						Key Post - Retirement planning - My experience
					

I was asked to share my own experiences/thoughts which I’m happy enough to do. For the avoidance of doubt, none of it is rocket science so please don’t expect anything revolutionary.  I started by creating a spreadsheet which details our current income and expenditure (including discretionary...



					www.askaboutmoney.com
				




I'm looking forward to reading it!


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## triplej (1 Jul 2020)

Purple said:


> When you retire you'll have a net income from pensions of around €32 a year plus your rental income. Therefore if you take Sarenco's advice (you should) you'll have no mortgage, an annual income of about €36000 (assuming €4k net from your investment property) and over €200k in the bank (€100k left in investments + €100 lump sum at retirement). You'll also have a €200k capital asset and a pension worth well over a million euro.
> 
> Could you live on a take home income of around €700-€750 a week?
> 
> I would be very comfortable on that level of income.  My expenses will be much lower . Additionally I would plan to downsize as I will be living alone (most probably!) and have quite a large property in a desirable location. This would most likely give me a further 200k+ pot.


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## triplej (1 Jul 2020)

SPC100 said:


> 45 to 60 is 15 years time frame. Op has early retirement goal.
> 
> 200k equity could double in value in that time which could facilitate even earlier retirement. selling it down now will have taxes.
> 
> ...


Hi SPC, my savings are €500to equities and €250 …. I will consider a change to this based on earlier advice.   

My car loan is €340p.m. at a rate of 7.5% with Credit Union, approximately 15 months left to run. 

The kids will need to move from home to go to college, all recent reports suggest that realistic costs are 12k/annum; to be conservative I've been assuming a 5 year college stay. 

I see your point on pushing myself to retire earlier than 60 .. but I have a slightly different view on this.  I have postponed the better things in life with a view to enjoying life later only to find that if you don't enjoy the present you may not get the opportunity to do so.  I have had first hand experience and it is a wake up call, don't put all the eggs into living a long and healthy life no matter how well you look after yourself! It may not happen.  However, I do believe in planning for the best outcome possible and the advice on here is invaluable in helping me do so! Thanks for the help!


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## Sarenco (1 Jul 2020)

triplej said:


> My car loan is €340p.m. at a rate of 7.5% with Credit Union, approximately 15 months left to run.


Eeek!

It doesn't make sense to invest in equities while carrying expensive debt.  Paying off that car loan should be your number one priority.


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## triplej (1 Jul 2020)

Thanks Sarenco, I was very much of that thinking but hadn't acted on it until this week. It will be first to go!  I have already contacted my financial advisor to suspend purchase of equities and will clear car debt.


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## SPC100 (1 Jul 2020)

Id still stick with my earlier advice.

-Pay off car loan with cash.
-switch future savings to mostly cash (to build up for college fees).
-investigate if you can buy back years to be ready for earlier retirement.

But I'd add consider switching the rental to somewhere your kids could use during college.


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## Sarenco (1 Jul 2020)

@SPC100

Liquidity concerns aside, it makes no sense to save cash @0% while carrying mortgage debt any rate higher than 0%.


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## OMG_OMG (2 Jul 2020)

Gordon Gekko said:


> Take your mortgage, money you save regularly, childcare, schooling, pension provision itself, debt servicing, the actual cost of working (clothing, coffee, lunches, etc), and get rid of them.
> 
> What’s left behind is less than you’d think.



You are so right.
I did just that and came up with a figure of €40K per year that I wont be paying once Mortgage, Investment mortgage, insurances, childcare, petrol and a few other little things are stopped.  And I could go higher than that by getting rid of one car and cutting my remaining monthly savings amount if i had to.  I couldnt believe it.


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## triplej (2 Jul 2020)

SPC100 said:


> Id still stick with my earlier advice.
> 
> -Pay off car loan with cash.
> -switch future savings to mostly cash (to build up for college fees).
> ...


Thanks SPC, I agree with you!

My plan, I am going to pay down the car loan with immediate effect and divert the savings into cash.
I have an investment product set to mature early next year which should allow my to clear off the investment mortgage.  When combined with the savings from the car loan this will effectively amount to another €1000/month in saving.  All going into cash savings (perhaps some into the 5-year saving scheme as suggested by Sarenco).
I will investigate the buying back of years to determine if its efficient for me personally also.

Thanks again. TJ


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## Gordon Gekko (2 Jul 2020)

OMG_OMG said:


> You are so right.
> I did just that and came up with a figure of €40K per year that I wont be paying once Mortgage, Investment mortgage, insurances, childcare, petrol and a few other little things are stopped.  And I could go higher than that by getting rid of one car and cutting my remaining monthly savings amount if i had to.  I couldnt believe it.



Tell me about it! €85k was the number I came up with.


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## Allpartied (2 Jul 2020)

Just a word on your predicted costs for college years.  I think it's a little high. 

My eldest daughter has just completed first year in Dublin.  

3000 euros for registration and 4500 euros for accomodation ( shared room).  

Travel cost about 100 euros a month, so add on 800 ( although the Covid crisis reduced that this year).  

Laptop was 400 euros.  It's a one off cost, so split by four to give an annual amount of 100 euros.  
That makes 8400 per year.  If they don't go to Dublin, probably, cheaper. 

Now, there are all sorts of other expenses, clothing, food, going out, phones and the rest.  But there is a thing called growing up and, even though it seems impossible to imagine when they are 10 or 11, it will happen and then they will be able to earn their own money.  
If they get a summer job and, maybe , a weekend job they can, easily , pull in 4 or 5k per year.  This is a great way to learn the value of money, the budgeting of money, develop a hugely important skill set which will set them up for adult life.   Plus, it increases your pension pot. 


So 9k a year would be plenty, which would save you 36k on your planned expenses for college.


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## OMG_OMG (2 Jul 2020)

Allpartied said:


> Just a word on your predicted costs for college years.  I think it's a little high.
> 
> My eldest daughter has just completed first year in Dublin.
> 
> ...



If my classmates at uni were anything to go by, the kids will be pretending they didnt get theoir grants, and getting part time jobs, while telling you that they are so busy studying that they havent time for a job, while batting thier eyelids and holding the hand out to you


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## triplej (2 Jul 2020)

OMG_OMG said:


> Allpartied said:
> 
> 
> > Just a word on your predicted costs for college years.  I think it's a little high.
> ...


That's what worries me....I was that classmate!!


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## triplej (2 Jul 2020)

Allpartied said:


> Just a word on your predicted costs for college years.  I think it's a little high.
> 
> My eldest daughter has just completed first year in Dublin.
> 
> ...


Sorry made a mess of the previous response...D'oh!
Thanks Allparties.   That's good to hear!  Dublin would be the most likely option for college (there are other's .. not too far away).  I'm aware that a lot of the estimates on costs of going to college, running a car, running a home are often inflated by vested interests but am trying to break the habit of a lifetime and planning prudently for the future. 

 I would prefer to have a holiday slush fund left over after they are done than be stuck for the money when they need it most!! That's the point I'll be telling them I'm off to spend their inheritance and I'll mean it too!!


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