# Retire earlier, if possible



## zsuzsa (6 Dec 2019)

Age: 35
Spouse’s/Partner's age: 35

Annual gross income from employment or profession: €70,000
Annual gross income of spouse:  €70,000

Monthly take-home pay - about €6300

Type of employment: one HSE, one private sector

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


Rough estimate of value of home - €500,000 but we are about to do an extension etc and put €150k into house - this is from an inheritance and no tax due. The value should hold when work is done - we hope - it's in city centre.

Amount outstanding on your mortgage: - Roughly €380,000
What interest rate are you paying? – 3% fixed for another 4 years (we pay 10% over so 1600 pm)

Other borrowings – car loans/personal loans etc
Car on PCP is €300 pm - we have option to buy it for €10k next year

Do you pay off your full credit card balance each month?
No credit card

Savings and investments:
Small credit union account of about €7000 - but we are eating into this each month and it's dwindling!

Do you have a pension scheme?
I am in Public Service Pension Scheme (but only joined in 2014 so it's the single scheme i.e. the crap one) and also put in €300 pm to an AVC
He put in €580 each month to a private scheme

Do you own any investment or other property?
No

Ages of children:
Two - 9 months and 2.5 years. Both in creche - 1600 pm. This will go down  a bit when eldest starts preschool but realistically we will be paying a minder over €1000 pm while they're in school anyway for pickups etc.

Life insurance: yes €115 pm for a 750k policy and also Mortgage Payment Protection 45 pm.
Both have Income Continuance Plan in place €150 pm for both of us.
Health insurance about €250 pm.

Other expenses groceries €400pm and cleaner €200pm (not negotiable as we both work full-time), internet and TV €100pm. Utilities 120pm. I am a bit of a divil of online shopping too. Probably €200 pm on that. We do eat out at weekends with the kids etc too. 

At the moment we are breaking even/dipping into credit union for a few hundred extra each month (I realise now the online shopping is probably the culprit - it's only when you sit and write these things down you realise!)

Good news - next year my take-home pay will double as I will be a hospital Consultant. If pay parity is restored it might go up to €180k. While I realise I am very fortunate I really don't want to be working until I'm 68.

What should we do with the extra money - we are doing fine just about on what we have now - would people recommend putting more into pensions, other investment fund, pay off some mortgage once our fixed rate is up?


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## michaelm (6 Dec 2019)

No reason you can't retire early, you just need to wise up financially.  If you've read any similar threads on here you'll already know you should keep a spending diary and do a moderate budget.  Maybe pick up a copy of Money Doctors 2020 or some other family finance book and read it cover to cover over Christmas. I'd be reducing my mortgage (and paying out the car) with the inheritance and tacking on a more moderate extension, if any.


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## goingforgold (6 Dec 2019)

Youre at a very expensive time in life so not surprising that things are relatively tight on a monthly basis, ie you have decent net pay at €6300 (after pension provision) but €3200 is gone straight away on mortgate and creche. If your pay is to go up by 70k next year then that's roughly 35k net...try and save that and that would go a long way towards early retrement staright away, if you were to save that and future pay rises every year.


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## llgon (14 Dec 2019)

I would reiterate goingforgold's advice above. Don't worry too much about your level of spending, you should be able to reduce it slightly now you are aware. Once you receive a pay increase ring-fence it for paying off debt/pension/investments etc rather than increasing your spending.  If you can stop eating into your credit union savings now and add a bit to them monthly you could aim to have the 10k ready to pay off the PCP next year.

Just a warning though, you will only see about 40% of your increase making it into your net pay when all deductions are taken. Don't worry yet about what exactly you'll do with the extra money - keep an eye on your spending, get your extension done and then you'll be ready to look at that.


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## noproblem (14 Dec 2019)

There's a fierce amount of people using an awful lot of their present money, etc, to have an early retirement. Don't ever forget to enjoy the life you have right now, because,  just like your pension investment monies there's no guarantees you'll see any future retirement.


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## zsuzsa (7 Jan 2020)

Thanks everyone. Good advice.


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## Leper (7 Jan 2020)

I'm having a rise in blood pressure reading the original post. You and your spouse are only 35 (a child in my terms, no offence!). Put off all thoughts of early retirement until you are least 52 years 2 months old. We can't predict what will happen next week never mind what happens next year. You're earning well and onto a winner. Keep it that way and then having reached 52 years 2 months you can review your situation.


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## zsuzsa (7 Jan 2020)

Leper said:


> I'm having a rise in blood pressure reading the original post. You and your spouse are only 35 (a child in my terms, no offence!). Put off all thoughts of early retirement until you are least 52 years 2 months old. We can't predict what will happen next week never mind what happens next year. You're earning well and onto a winner. Keep it that way and then having reached 52 years 2 months you can review your situation.


Thank you! I think the post was fuelled by anxiety regarding my return to work after my last (intended!) maternity leave and a letter from the HSE pension people with RETIREMENT AGE 67 highlighted! I am back to work and enjoying it now. Will report back at 52!


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## beautfan (9 Jan 2020)

As a consultant will you not have private practice?


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## zsuzsa (10 Jan 2020)

No, I just want a public service position. Life is for living, etc!


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## David_Dublin (10 Jan 2020)

Leper said:


> I'm having a rise in blood pressure reading the original post. You and your spouse are only 35 (a child in my terms, no offence!). Put off all thoughts of early retirement until you are least 52 years 2 months old. We can't predict what will happen next week never mind what happens next year. You're earning well and onto a winner. Keep it that way and then having reached 52 years 2 months you can review your situation.


What's the story with 52 years 2 months? Is this random or related to something specific?


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## Laughahalla (10 Jan 2020)

OP, of course you can retire early. But only if you stop borrowing money and curb your lifestyle. Once you do that, retiring early will be easy on your consultants salary.
It's about choices. Spending your inheritance on an extension won't help you retire early. Paying down debt and investing will.

you are falling into the classic lifestyle/consumer trap. Great income but not accumulating wealth.  With your current salary you are about breaking even or dipping into saving. When you get your increase try invest the increase otherwise you will find it very easy to spend it on stuff you probably don't really need.


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## David_Dublin (10 Jan 2020)

Laughahalla said:


> OP, of course you can retire early. But only if you stop borrowing money and curb your lifestyle. Once you do that, retiring early will be easy on your consultants salary.
> It's about choices. Spending your inheritance on an extension won't help you retire early. Paying down debt and investing will.
> 
> you are falling into the classic *lifestyle/consumer trap*. Great income but not accumulating wealth.  With your current salary you are about breaking even or dipping into saving. When you get your increase try invest the increase otherwise you will find it very easy to spend it on stuff you probably don't really need.



It's not quite as black and white as that though, is it? There's an argument to be made for "life is for living", or at least having a balance between a good standard of living and planning for the future. Maybe more a philisophical argument, and here's probably not the place for it. But based on a doubling of salary, seems to me like the OP & family will be able to have their cake and eat it, so to speak.


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## Laughahalla (10 Jan 2020)

David_Dublin said:


> It's not quite as black and white as that though, is it? There's an argument to be made for "life is for living", or at least having a balance between a good standard of living and planning for the future. Maybe more a philisophical argument, and here's probably not the place for it. But based on a doubling of salary, seems to me like the OP & family will be able to have their cake and eat it, so to speak.



Yes, but the OP wants to be able to retire early so she can't have her cake an eat it. If their lifestyle consumes their salary now it will probably always consume their salary. The only way to retire early is to invest and curb the spending.

Simple path to wealth  - J.L. Collins book

Avoid debt
Spend less than you earn
Invest the surplus wisely


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## David_Dublin (10 Jan 2020)

Laughahalla said:


> Yes, but the OP wants to be able to retire early so she can't have her cake an eat it. If their lifestyle consumes their salary now it will probably always consume their salary. The only way to retire early is to invest and curb the spending.


Their salary doubling would challenge the assertion that their lifestyle will probably always consume their salary. The extra money can be used to invest, they are already looking at curbing spending, so seems like they can strike a good balance, and not necessarily have to sacrifice to much on the lifestyle. If the salary was not doubling, for sure more drastic change to lifestyle/spending would be needed to fund early retirement.


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## Laughahalla (10 Jan 2020)

Hopefully they will be wise. With the increase in salary they have an opportunity that most will never have.
It could mean the difference between them being able to retire at 55 or not being able to retire until they are close to 68

It will all come down to their own choices.


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## NoRegretsCoyote (10 Jan 2020)

@zsuzsa 

"Life insurance: yes €115 pm for a 750k policy "

To me you are over-insuring here. In the event of your or spouse's death you still have €370k after mortgage paid off. For what?

Sure, you will have some more expenses, but you will still have an income, and I don't think you need to insure for having a large chunk of cash as well.


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## Leper (10 Jan 2020)

David_Dublin said:


> What's the story with 52 years 2 months? Is this random or related to something specific?



Wait until you're 52 - At that stage you can think more clearly.
The additional 2 months - Just to ensure you thought more clearly
Only another Dubliner would question this.

I hope this is of help.


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## David_Dublin (10 Jan 2020)

Leper said:


> Wait until you're 52 - At that stage you can think more clearly.
> The additional 2 months - Just to ensure you thought more clearly
> Only another Dubliner would question this.
> 
> I hope this is of help.


Brilliant, it's of great help!


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## zsuzsa (10 Jan 2020)

Hi thanks all. The extension is necessary... we live in city centre so we only got 95sqm for our mortgage, and we have 2 smallies getting bigger. So I am definitely ok with spending the inheritance on having a bigger house, safer for kids etc with open plan living and adding another bedroom should add some value, I guess.
By 'life is for living', I meant I am more than happy to take a public service '39 hours' consultants' job for a better work/life balance. Yes adding private practice could increase salary more, but I have no interest in it, all the extra overheads, insurance, hours working etc.
The life insurance is in addition to mortgage protection. To be honest at this age if anything happened my spouse yes I would want a large amount in the bank for the future, for the sake of 115 a month I am okay with this. It is worth ten years of my husband's salary to us if anything did happen him. We may stop it closer to retirement age obviously if our savings increase.
I do see a lot of people in work whose life or quality of life is shortened unexpectedly; I know it is somewhat a biased sample! but I am in favour of enjoying life, saying that I want to put the bulk of any salary increase away when it does happen. I think we will see a financial advisor when the time comes and talk about investment options.
Thanks for all your input, and life experience though! I am looking forward to 52 (and 2 months) and starting to panic then!


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