# Am I on track for a somewhat comfortable retirement?



## MaryMcK (20 Oct 2022)

I will start my saying some of the figures on other makeovers are intimidating! Well done to those of you who have been savvy and prudent over the years; I wish I had had your sense. 

My makeover, by comparison seems like peanuts… However, this is my reality (and maybe others reading?) and I would very much appreciate your input.

*Personal details*

Age: 47

Spouse’s/Partner's age: Divorced

Number and age of children:
1, primary school aged

*Income and expenditure *

Annual gross income from employment or profession: It varies. I am a HCP and earned 54k last year, looking like €60k this year. Depends on amount of overtime/unsocial hours I work.

Monthly take-home pay:
Approx €3k after pension deduction & AVCs

Type of employment: As above, public service on Single Scheme

In general are you:
(a) spending more than you earn, or
(b) saving? Saving into various ‘pots’. Everything from very short term, such as Christmas to long term car/college. I have around €20k.


*Summary of Assets and Liabilities *
Family home worth €220k with a €135k mortgage
Cash of €20k (as previously mentioned - some of this in state savings)
Defined Contribution pension fund: €tiny / maybe €15k? I only qualified 4 years ago and have never paid onto a pension previously.


*Family home mortgage information *
Lender: ICS
Interest rate 2.45%, fixed for another 3.5 years.
18 years remaining on mortgage, but I am overpaying every month to reduce term.

*Other borrowings – car loans/personal loans etc: No loans apart from mortgage *
Do you pay off your full credit card balance each month? Yes




*Other savings and investments:*

Do you have a pension scheme?
Member of Single Public Service Pension scheme since 2018

Currently paying AVCs of 15%

*What specific question do you have or what issues are of concern to you? *
My concern is retirement. It’s college for my child. It’s making the right decisions over the course of the next 10 years, that will put me on the right path. Although I accept I will never be rich, I would like to be comfortable. I do not want you to be in a position of choosing between food or heat. 

In the immortal words of Cher; if I could turn back time….  As it is, here I sit, 20 years off retirement and not feeling comfortable about my prospects.

I have spent many hours planning and calculating. My 5 - 10 year plan is as follows and I would appreciate if you could advise if I’m doing this right. Maybe there is something glaringly obvious that I am missing? I’m open to all and every suggestion. Thank you.

*The Plan:*

I intend to increase my AVCs to 20% in the new year. This, along with the 5% I pay through the SPSPS would bring me to the maximum 25% permitted at my age. 

This rise in contribution will be covered by the upcoming building momentum rise and my yearly increment. I would intend to increase this figure in 5% increments as I get older and my age allows. 

I am aware that pension contributions are deducted from reckonable income when applying for college grants. In 10 years and assuming everything hasn’t changed (which it very well could, of course), I will be paying 35% total into my pension. This will assist in securing some sort of grant on my salary. Or it would in 2022 anyway. The future may be different.

I currently save €500 a month, split between an emergency fund and car replacement account ( car is ok for another year or 2, it’s 2016). Both accounts are with credit unions. They are at nearly €10,000 combined right now. I intend to reduce this to €300 per month as I feel I do not need much more than that amount cash on hand.

I had also been saving the children allowance for future college. I have now transferred monies saved to date into a 10 year stage savings scheme (€8k total). I have other plans for that €140 a month going forward.

I currently overpay my mortgage by €200 per month. I intend to increase this to €500 using children’s allowance and moneys I would have previous saved to credit union. My aim is to be mortgage free or very close to by the time my child begins college in 10 years. I can overpay 10% a month without penalty at present.

All of the above leaves me living a simple life in the here in now. We will want for nothing, we will have security, but we won’t be living the high life by any means. 

What do you think?


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## MaryMcK (20 Oct 2022)

Oh and I should also mention, at retirement, I will have 40 years ‘stamps’ so my state pension will be in full. Combined with the SPSPS at 23 years, should yield me the princely sum of approx €17k per annum. Don’t know what the AVCs will translate to. I’d like to have around €25k per annum all in if I could.


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## Protocol (20 Oct 2022)

Note that the typical PS pension cont is 6.5%, made up of 5% main scheme and 1.5% Spouses and Children scheme.

I presume HCP = healthcare professional.


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## Protocol (20 Oct 2022)

Are you sure about the 17k pension projection, after 23 years service?

The current State pension is (253.30)(52.18) = 13,200

Your work pension would be 4k after 23 years service? Based on a 54k-60k salary. That seems low?


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## goingforgold (20 Oct 2022)

I think your plan is prudent and spot on. You'll be mortgage free in 10 years, retired in 20 years with 17k per annum pension plus AVCs (which in 20 years time could be very significant as you are contributing max amount). You'll also have pretty significant savings at that stage with no dependent children, so all in all you are set for a very comfortable retirement.

Don't scrimp and save more than you need to in the meantime, as you don't necessarily need to, and all out living for tomorrow can backfire spectacularly in life I'm afraid. There's many a person who achieved richest person in graveyard status, but don't know of any who took it with them


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## Pinoy adventure (20 Oct 2022)

2016 car - you could easily hold this for at least 4 more years (the benefit of 2 years nct up till 2026) and redirect the portion of the car fund elsewhere.


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## MaryMcK (20 Oct 2022)

Yes, HCP is healthcare professional.

I’ll admit, my calculations are rough. I basically took an average salary over 24 years, dividided by 80 and multiplied by years of service:

60,000/80*23 = 17,250. Maybe this is wrong? I have an appointment with Cornmarket next week to go through projections, so will clarify. I hope you’re right.

And thank you for giving me and heads up about the 1.5% Spouses and Childrens! I’ll factor that in.


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## MaryMcK (20 Oct 2022)

goingforgold said:


> I think your plan is prudent and spot on. You'll be mortgage free in 10 years, retired in 20 years with 17k per annum pension plus AVCs (which in 20 years time could be very significant as you are contributing max amount). You'll also have pretty significant savings at that stage with no dependent children, so all in all you are set for a very comfortable retirement.
> 
> Don't scrimp and save more than you need to in the meantime, as you don't necessarily need to, and all out living for tomorrow can backfire spectacularly in life I'm afraid. There's many a person who achieved richest person in graveyard status, but don't know of any who took it with them


This is excellent advice, thank you. Yes, I do need to live also. I still want to get out there and do things while relatively young and able. I’ll remember the richest person in the graveyard example!


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## MaryMcK (20 Oct 2022)

Pinoy adventure said:


> 2016 car - you could easily hold this for at least 4 more years (the benefit of 2 years nct up till 2026) and redirect the portion of the car fund elsewhere.


 Good point. I think to replace my car today with a like for like would cost a similar amount to what I paid 3 years ago! I’m in no rush to change and will wait and see. I might consider throwing a lump sum off the mortgage instead.


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## PebbleBeach2020 (20 Oct 2022)

I think your work pensions will be about 17k. I presume you are post 1995 and your pension is based on your final salary and not your average salary over the 23 years. 

If that's correct and you retire at 65 with 23 years service on a salary of €60000, then your pensions would be 23/80*€60000 = €17250. That includes the state pension. 

The AVCs are separate and you will be able to get relief at 40% going in and only taxed at 20% max when you draw down. 

Use the college savings to pay down debt now. You can use your income to pay college bills as they arise. 

I agree with the suggestion of living now. Get out, enjoy yourself. You might meet someone. And there's no point living a penal life now to have a comfortable retirement. You can do both. 

Well done on your journey so far and asking for advise. I wish you well.


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## Sunnygirl69 (21 Oct 2022)

MaryMcK said:


> Yes, HCP is healthcare professional.
> 
> I’ll admit, my calculations are rough. I basically took an average salary over 24 years, dividided by 80 and multiplied by years of service:
> 
> ...


Mary I'm a HCP too & single scheme pension also. I used Cornmarket to start putting into AVCs, just started about 2 years ago. Be careful with the charges, negotiate downwards as best you can. Forsa seem to have struck up an agreement with HSE to use them, if you want the easiest way of it coming out of your salary.


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## llgon (21 Oct 2022)

PebbleBeach2020 said:


> If that's correct and you retire at 65 with 23 years service on a salary of €60000, then your pensions would be 23/80*€60000 = €17250. That includes the state pension.


I don't think this is correct.  As  Mary does not have full service the full state pension will not be taken from the calculated figure. This would reflect her insurable employment in her years outside the public service, which she will receive in addition to the above.


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## Clamball (21 Oct 2022)

I think you have it all well thought out.  It would be good to get some projections on the pension and the AVC’s.  I think it is amazing you are overpaying the mortgage, and paying the max into your pension while being a single parent.

Maybe consider when your child becomes a teenager they may be into expensive sports/music/hobbies so you may have to spend a bit more in the day to day spend.  If that is the case you might need to slow the mortgage payments while still paying into the pension.

Best of luck.


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## MaryMcK (21 Oct 2022)

Sunnygirl69 said:


> Mary I'm a HCP too & single scheme pension also. I used Cornmarket to start putting into AVCs, just started about 2 years ago. Be careful with the charges, negotiate downwards as best you can. Forsa seem to have struck up an agreement with HSE to use them, if you want the easiest way of it coming out of your salary.


Thanks. I’ve been with Cornmarket now for 2 years. I have an appointment next week to gain some clarity around projections and increasing my percentage contribution. I will also clarify their charges and see if there is any wiggle room.


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## MaryMcK (21 Oct 2022)

llgon said:


> I don't think this is correct.  As  Mary does not have full service the full state pension will not be taken from the calculated figure. This would reflect her insurable employment in her years outside the public service, which she will receive in addition to the above.


This is something I also need to confirm. I was under the impression that the €17k after 23 years service was inclusive of the state pension. Would be great if I was off the mark on this! I’ll check this out and find out for sure. I have found it nigh on impossible to access any easy to use calculators or information on the Single Scheme online. Probably because most of those on it are decades away from retirement. Late starters like myself are obviously few and far between!


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## MaryMcK (21 Oct 2022)

Clamball said:


> I think you have it all well thought out.  It would be good to get some projections on the pension and the AVC’s.  I think it is amazing you are overpaying the mortgage, and paying the max into your pension while being a single parent.
> 
> Maybe consider when your child becomes a teenager they may be into expensive sports/music/hobbies so you may have to spend a bit more in the day to day spend.  If that is the case you might need to slow the mortgage payments while still paying into the pension.
> 
> Best of luck.



Yeah, I can reduce the overpayment at any time. I will, however, aim to keep the AVCs sacrosanct. I’m under no illusions that my daughter will only get more expensive as time goes on. At the moment, this is the plan. Experience has taught me that plans can change. I’ll have to just play it by ear. Thanks for your encouragement!


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## MaryMcK (21 Oct 2022)

llgon said:


> I don't think this is correct.  As  Mary does not have full service the full state pension will not be taken from the calculated figure. This would reflect her insurable employment in her years outside the public service, which she will receive in addition to the above.


@llgon, I’ve been putting some thought to this and I think you’re correct. @Protocol suggested I’d gone wrong in my calculations too.

My state pension is related to the 40 years I will have worked by retirement age; not just the 23 years in public service. I would assume that the €13k state pension would be divided between the two. So 17/40 of €13k  (€5.5k approx) would be added to the previously calculated €17k = €22.5k.

So much better if this is correct! Again, I will confirm and feed back in case anyone else is in a similar position and reading. Thanks to everyone who took the time to reply.


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## Protocol (21 Oct 2022)

Protocol said:


> Are you sure about the 17k pension projection, after 23 years service?
> 
> The current State pension is (253.30)(52.18) = 13,200
> 
> Your work pension would be 4k after 23 years service? Based on a 54k-60k salary. That seems low?



I will try to do the sums on this in the next hour. I will report back.


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## Protocol (22 Oct 2022)

https://singlepensionscheme.gov.ie/wp-content/uploads/2021/01/Standard-Accrual-Booklet-EN.pdf


I will use 60k as gross pensionable salary, paid at 5k per month

Joined scheme aged 43 in 2018, assume retirement at age 67, with 24 years service (288 months)

All calculations ignore inflation



*Lump-sum benefit accrued each month:*

3.75% * full-time gross pensionable remuneration * work pattern

3.75% * 5,000 * 100% = 187.50 benefit built up each month

Total lump sum = 288 months * 187.50 = €54,000



*Pension benefits accrued each month*

CSP = 253.30 pw or 1101 pm

3.74 * CSP threshold is 3.74 * 1,101 = 4,119 per month

0.58% * 4,119 * 100% = 23.89 benefit built up each month

Plus 1.25% * (5,000 – 4,119) * 100% = 11.01 benefit built up each month

Total pension benefit = €34.90 built up each month

(288 months)(34.90) = 10,051 pension



*How did you arrive at 4k work pension?

My calculations suggest 10k+*


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## Codogly (22 Oct 2022)

Fair play Mary …your dead right the vast majority of money makeover on this site are  from very well heeled individuals , it’s great to see a normal looking case for a change.
IMHO your doing the most important thing by taking responsibility and planning you and your family future. Best of luck. BTW your doing better than most.


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## NoRegretsCoyote (22 Oct 2022)

Protocol said:


> *How did you arrive at 4k work pension?*


She assumed her full SPC entitlement would be subtracted from her occupational pension entitlement.


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## NoRegretsCoyote (22 Oct 2022)

MaryMcK said:


> I intend to increase my AVCs to 20% in the new year. This, along with the 5% I pay through the SPSPS would bring me to the maximum 25% permitted at my age.


Not having looked at this too closely, but you could be oversaving with the AVCs.

You are on track by retirement to have a mortgage paid off, no dependents, and (in today's money) a net income of €2k.

That's equivalent to your situation today of a net income of €3k with a mortgage and a dependent child.

So you certainly won't see a _dip_ in income at that point, whether that's _comfortable_ is more subjective!


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## MaryMcK (22 Oct 2022)

@Protocol This is amazing, thanks so much! Your workings have come back to my back of a piece of paper calculations. Albeit more exact.

Approx €10k per annum plus lump sum of €50k approx from Single scheme. A further €13k per annum from state pension.

Another back of an envelope calculation in relation to AVCs give me an annual figure of €10k approx (assuming I continue to contribute in line with my age permitted percentages) and a lump sum of €50k.

All approximate, of course, but that’s all I need for now. This would see me retire with €100k lump sum and an annual pension of €33k in today’s money. Leaving me under the threshold for income tax.

With no mortgage and no dependants (she says hopefully!), this represents comfortable to me @NoRegretsCoyote! I will be able to eat like a king in a balmy 20 degrees all year around. With a holiday or 2 thrown in.

Again, I’d like to thank you all for your contributions to this. You have certainly helped. Now to just get on and do it!


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