# 20 years until retirement with no pension or savings...



## pacmon (22 Aug 2022)

*Personal details*

Age: 47
Spouse’s/Partner's age: 49
Number and age of children: Four children: 12, 9, 8 and 4

*Income and expenditure*
Annual gross income from employment or profession: €106k
Annual gross income of spouse: €0
Monthly take-home pay: €6,000
Type of employment: Private sector - permanent full-time

In general are you:
(a) spending more than you earn, or
(b) saving?
- Barely breaking even every month, very difficult to save for pension or childrens' education

*Summary of Assets and Liabilities*
Family home worth €900k with a €334k mortgage remaining
Cash/savings: 0
Defined Contribution pension fund: 0
Company shares: 0

*Family home mortgage information*
Lender: Avant - 20 Year fixed term
Interest rate: 2.50%
If fixed, what is the term remaining of the fixed rate? 20 years.
Monthly repayments: €1769

*Other borrowings*
Home Improvement Loan (40k)
Lender: Avant - 7.5 years remaining, €30k balance remaining
Interest rate: 5.9%
Monthly repayments: €500
Additional monthly payments: €300 (attempting to clear entire loan early - in ~3 years)

Do you pay off your full credit card balance each month?
YES

*Other savings and investments:*
- No investments
- Saving €50 a month for each child, deposited directly into their BoI Child Saver accounts, 0.25% interest rate (for future education)

Do you have a pension scheme?
No

Do you own any investment or other property?
No

Other information which might be relevant

Life insurance:
Yes, cover for 400k+

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

We have roughly 20 years until retirement age, and neither of us have a private pension.  My employer has just introduced a company scheme, due to start in a few months, where they match up to 3% of an employee contribution - so I will be availing of this, and would hope to contribute even more.  My wife is currently unemployed, due to looking after the children, although it is likely she will need to return to work so that we can maximise pension contributions and savings for our children's future education.  We have a lot of catching up to do, and it appears we'll need to start lumping thousands into savings aggressively as soon as possible.

*Pension Question*
With 20 years until retirement age, we need to put as much into private pensions as possible.  I'm assuming that the best way to get the most 'mileage' for our money is to be with a company scheme where the employer also matches a certain percentage, thereby building up the fund much faster than if it were just a private pension?  Would this (company scheme with company matched contribution) be considered the fastest and most optimal way to build up your pension fund?

*Education Fund Question*
We are not saving enough for our children's education at the moment.  The Zurich Insurance "cost of college calculator" estimates we should be putting at least 1k monthly into an investment fund.  We're currently only saving 200 euro into child saver accounts, and the money isn't growing.  We need to increase payments and move the money somewhere where it will grow.  Would a fund with Zurich/Irish Life/other be the best way to go to maximise the return on the college savings?


Thanks for reading.


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## Brendan Burgess (22 Aug 2022)

pacmon said:


> Home Improvement Loan (40k)
> Lender: Avant - 7.5 years remaining, €30k balance remaining
> Interest rate: 5.9%





pacmon said:


> - Saving €50 a month for each child, deposited directly into their BoI Child Saver accounts, 0.25% interest rate (for future education)



So you are borrowing money at 5.9% to put it on deposit at 0.25% ? 

This makes no sense.

Don't compartmentalise your savings and finances generally.

The best way to provide for your children's future is to maximise your wealth.
The best way to maximise your wealth is to pay off your expensive borrowings as quickly as possible.

So cash the savings plans and pay it off your Avant loan.

Brendan


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## Brendan Burgess (22 Aug 2022)

pacmon said:


> Monthly repayments: €500
> Additional monthly payments: €300 (attempting to clear entire loan early - in ~3 years)





pacmon said:


> - Barely breaking even every month,





pacmon said:


> - Saving €50 a month for each child, deposited directly into their BoI Child Saver accounts, 0.25% interest rate (for future education)





pacmon said:


> Monthly repayments: €1769



You are doing much better than barely breaking even. 

You are paying €1,000 a month off your mortgage capital. 
You are paying about €650 off your home improvement loan capital.
You are saving €200 a month into the kids' fund.

So you are saving or your wealth is increasing by about €1,850 per month.

That is not bad given that you have chosen to have 4 kids and to have your wife work at home. 

You have made life choices. They are more important than financial choices. 

Brendan


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## Brendan Burgess (22 Aug 2022)

pacmon said:


> With 20 years until retirement age, we need to put as much into private pensions as possible. I'm assuming that the best way to get the most 'mileage' for our money is to be with a company scheme where the employer also matches a certain percentage, thereby building up the fund much faster than if it were just a private pension?



Absolutely, put in the maximum which your employer allows. 

But don't put in any more for the moment.

Your clear priority is to pay off the 5.9% home loan. 

When that is done, then review where you are going in terms of whether to overpay the mortgage, contribute more to a pension, or build up a savings fund. 

But that is 3 years away. Come back in three years and do another review then.

Brendan


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## pacmon (22 Aug 2022)

Thanks so much for the advice @Brendan Burgess - very very helpful.  Makes complete sense to get rid of that home loan as soon as possible, and we will save a significant amount by not having to pay all that interest.  Also nice to hear that we're doing better than it feels like we're doing, things are tight be we are managing it.

I think we'll change direction with the savings asap, and pay off a large chunk of the home loan immediately.  And over the next couple-few years, try to pay off as much as possible with additional payments each month.  With any luck, we might be able to get rid of it in a couple years or less, and then be free to explore the other options (more pension, investments, etc) - and we'll look forward to getting to that point sooner than expected.  Thanks again.


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## Sarenco (22 Aug 2022)

pacmon said:


> Family home worth €900k with a €334k mortgage remaining
> Cash/savings: 0
> Defined Contribution pension fund: 0
> Company shares: 0


You may not want to hear this, but I would query whether you can really afford to live in a €900k house.

If you moved to a €500k house, you could clear all your debts and start making meaningful savings for your retirement and your kids' education.

I think this is a classic case of having "too much house" relative to your income.


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## Brendan Burgess (22 Aug 2022)

Hi Sarenco 

Interesting point.

But would they not be better off staying in the house and trading down when the kids are gone?  
At the moment, it's costing them about €400k @2.5% or €10k a year in interest for the "extra house" - assuming house prices remain stable over the next 20 years. 

Of course if house prices fall, the cost will be a lot greater. If house prices rise by 2.5% a year, the cost will be zero.

Brendan


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## Sarenco (22 Aug 2022)

Brendan Burgess said:


> But would they not be better off staying in the house and trading down when the kids are gone?


I don't think so Brendan.

The main reason is the OP would miss out on years of maximising tax relief on pension contributions.  

The OP is approaching 50 with zero pension savings.  He should really be contributing 25% of his salary to a pension scheme but I don't see how he could afford to do that while carrying material debts and with 4 kids to raise.

If he trades down to a €500k house, he could clear all his debts and comfortably build up an education fund for the kids *and *maximise his pension contributions.

IMO something has to give and the obvious answer to me is to trade down to a less expensive house.


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## Brendan Burgess (22 Aug 2022)

Sarenco said:


> the OP would miss out on years of maximising tax relief on pension contributions.



But the tax-free growth in the value of the property counteracts that to some extent. 

Brendan


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## Clamball (22 Aug 2022)

6000 - 1768 - (500+800) - 200 = 3232
Then you have childrens allowance + 560

So your spending apart from mortgage & home loan & kids savings is 3793.

Can you estimate your other costs, food, car(s), fuel, insurance, phones, tv, sports etc.   Are you looking at all your costs, and tracking where your 3.8 grand is going every month.  What kind of cars do you have, value, age?  Replacement plans?

Are you taking a holistic view of your whole finances?  Even if you broke it all down it might be helpful to see where that money is going.  So track it for a month and come back.  (I know late August, early September are very speedy months with kids).

But we will all have to be watching our costs this winter with fuel and changing our behaviours so throw in some other lifestyle changes too.

Definitely join the pension and match the company spend.
Get rid of the loan as fast as you can.
Then reassess how much you can maximise into your pension.
If you were mortgage free in 6 years then you could use that €2600 that you are paying in loans to fund that third level education, just paying each month from your wages, so there is some merit in the idea of downsizing.


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## NoRegretsCoyote (23 Aug 2022)

pacmon said:


> *Personal details*
> 
> Age: 47
> Spouse’s/Partner's age: 49
> Number and age of children: Four children: 12, 9, 8 and 4


You have a housing need for six people which means you need a big house.



pacmon said:


> *Summary of Assets and Liabilities*
> Family home worth €900k with a €334k mortgage remaining


I don't know where you live, but a €900k house is a big house in all but the most expensive parts of Dublin, and a very big house anywhere else.

I agree that you probably have too much house given your age and complete lack of pension savings. Moving to a €600k house would nearly eliminate your debt, would free up at least €1k a month in cash flow, and would allow you to get closer to the 25% contribution possible for your age.



pacmon said:


> *Education Fund Question*
> We are not saving enough for our children's education at the moment. The Zurich Insurance "cost of college calculator" estimates we should be putting at least 1k monthly into an investment fund. We're currently only saving 200 euro into child saver accounts, and the money isn't growing. We need to increase payments and move the money somewhere where it will grow. Would a fund with Zurich/Irish Life/other be the best way to go to maximise the return on the college savings?


A lot depends on where you live and whether kids can live at home during college. I think the best investment you can make is to pay down debt and/or make pension contributions as these returns are guaranteed and tax free. Then - depending on circumstances - you can take the foot off the pedal a bit to fund your children's education from ongoing income. Your youngest will be ten by the time your first child is in college so your spouse should be able to re-enter labour force by then.


But in the short term I think the best approach would be to have less house, less debt, and more pension. I'm not going to speculate on house prices, but I would have zero regrets downsizing in 2022 if I wanted to maximise equity withdrawal.


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## Brendan Burgess (23 Aug 2022)

I think that downsizing now is too drastic a step. 
On the other hand, if they were living in a €500k house I would advise against trading up to a €900k house. 

@pacmon
When do you expect your wife to return to paid employment? 
How much will she be earning? 
Do either of you have a likelihood of an inheritance at some time in the future? 

Sure you can clear your debt by trading down by €400k. 
But would that come with increased costs in terms of commuting? 
Is the house convenient to college which would save you on college accommodation costs and hassles? 

Instead of paying €2,500 a month in loan repayments, you could contribute €25,000 a year to your pension fund and get 40% tax relief, so the real cost would be €15,000. 

But when you have the €30k home improvement loan paid off, you will be able to contribute €800 a month to your pension or €10,000 a year. 

So downsizing now would allow you contribute an extra €15,000 a year to your pension or €20,000 from the age of 50.  You get an immediate "return" of €8,000 tax relief.  But your extra €400k of house needs to rise by only 5% a year to match that.  Of course, house prices could fall as well. 

I wouldn't rule out trading down and it's an option worth considering. But unless your current house is unsuitable and you can find a more suitable house for €500k, I would not do it for the moment.

Brendan


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## PGF2016 (23 Aug 2022)

Putting the financial stuff aside what would be best for your quality of life? If you could get a suitable property for 5/600k and clear all your debts would that take the pressure off and allow you to live a little more?


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## Peanuts20 (23 Aug 2022)

There are some basics you should also do here.



Ensure your will and guardianship plans are up to date (just in case)
Given your wife's employment position has or may change, do a full review of tax credits to see if they are at the are being used to the best effect and also, if not done already, consider a tax return or claim for medical expenses for the last few years.

I wouldn't worry about downsizing, not with 4 kids who will soon be 4 teenagers, you'll need the space. You can always consider trading down in 10 or 20 years time or when they have moved out.

I would start the pension now, purely to get started on it but focus on clearing the loan


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## NoRegretsCoyote (23 Aug 2022)

Peanuts20 said:


> I wouldn't worry about downsizing, not with 4 kids who will soon be 4 teenagers, you'll need the space. You can always consider trading down in 10 or 20 years time or when they have moved out.


I think that depends on OP's circumstances. A €900k house could be surplus to requirements even for six people depending on location. He could be paying a premium for a vanity address.


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## pacmon (23 Aug 2022)

Hi @Sarenco @Brendan Burgess @Clamball @NoRegretsCoyote @PGF2016 @Peanuts20 

Thanks for all the replies, I appreciate everyone taking the time to share opinons and advice on our situation.  It's all very helpful to look at all the different angles.  I'll try to respond to all the queries/comments.

On the affordability of the current house - I have questioned that myself, but never really considered it a major issue.  Our mortgage is 3.15 times my gross salary, so it's bit under the new Central Bank lending loan-to-income limit.  We moved into this house four years ago, and the purchase price was a lot less (about 70% less) than the current valuation.  Prior to this house, we were one of the cases in the tracker scandal, and fought for years to get our money back from the bank - and after this past move, the appetite to move again isn't all that great to be honest.

The house is in Dublin, and it's not huge, but it works.  We've been in the area for over 15 years, our kids are part of the community with football clubs and other extra curricular activities, so it's comfortable and we really love it here.  It's a short drive or cycle to the schools, I'm a short distance from the office on public transport, and there are lots of 3rd level colleges to choose from when the kids reach that age, plus they could live at home if the end up going to college in the area.  One of our kid's has a additional needs as well, so it's been very handy to be close to the various Children's Hospitals and clinics in Dublin.

We manage our family budget in a large spreadsheet, every penny is accounted for from the moment I get paid each month.  We change gas/electricity/broadband providers every year on the exact day the contract is up to keep costs are a bare minimum.  Shop at discount supermarkets such as Lidl to keep costs down.  Two cars in the household, both over 10 years old.  Nothing fancy, no frills, no crazy expensive purchases, food is always on the table and bills/loans always paid, one "budget" holiday once a year... but yes, it is tight, especially with the cost of living these days.

The idea of moving again to be mortgage free and free up all that extra cash is appealing, but also daunting and seems quite drastic at the same time.  Have to change everything for the kids; schools, clubs and circles of friends that they are already comfortable in.  All the appointments/consultants for our child with additional needs, will we have to travel back to Dublin all the time anyway?  Work for me... I'm not a fan of working from home and the thought of working from home for the rest of my professional career, talking to people over Zoom, seems grim.  A move outside Dublin would instantly solve the savings/pension issue for sure, but I just question if it would really be worth it.  Financially yes it would be, but everything else is the big big question mark.

From next month we're going to start paying off the home improvement loan aggressively, and I think we could have it gone completely in under two years by making extra payments.  From that point there would be a lot of extra money freed up.  My wife would likely be in a better position to return to work at that stage as well, as the kids would be older, whether it's full-time or part-time I don't know, likely in the 20k-40k salary range and we could try to secure a position with a company that also has a company scheme matching pension contributions to maximise the contributions to her pension fund.

It's a very tricky decision to make.  But for now, we are focused on the first task, to get rid of that loan - thanks to you all for the input on this.  I think that once it's gone, the financial pressure will be a fair bit less, plus the possibility of a new second income - so things could really change from that point.

Thanks again for all the replies, appreciate it.


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## Bluefin (23 Aug 2022)

Reading the above response you have answered your own questions.. Stay where you are and enjoy the area you are currently in...being mortgage free in the wrong place is more of a headache!


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## PGF2016 (23 Aug 2022)

pacmon said:


> Hi @Sarenco @Brendan Burgess @Clamball @NoRegretsCoyote @PGF2016 @Peanuts20
> 
> Thanks for all the replies, I appreciate everyone taking the time to share opinons and advice on our situation.  It's all very helpful to look at all the different angles.  I'll try to respond to all the queries/comments.
> 
> ...


If you were in a dire position I'd strongly suggest moving house but from reading your posts I don't think that's the case. I'd guess it'd be counterproductive with all the upheaval.


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## Brendan Burgess (23 Aug 2022)

PGF2016 said:


> If you were in a dire position I'd strongly suggest moving house but from reading your posts I don't think that's the case.



A very good summary.


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## Sarenco (23 Aug 2022)

pacmon said:


> We moved into this house four years ago, and the purchase price was a lot less (*about 70% less*) than the current valuation.


That strikes me as an unusually high level of capital appreciation over the last four years, even allowing for the fact that you have carried out some home improvements.

Are you sure that valuation is realistic?


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## Clamball (23 Aug 2022)

Thanks for the update, it was super helpful.  It is easy to see the assumptions we can make without the full picture.  

I would stay where you are.  
Start the pension at the 3 % contribution asap
Pay off the home loan as soon as you can but mind you don’t leave yourself even €1000 savings.
Stop saving for the kids education. You can’t afford to save currently.
Once the loan is paid off you will have some breathing space and start to save for car replacement, college, etc.  

I think it is just the home improvement loan has taken your savings and your spare cash.

Any chance of earning more yourself?   It will be hard for your spouse to work enough to cover childcare and take the kid to the endless appointments.

Best of luck


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## PebbleBeach2020 (23 Aug 2022)

Did you buy the house for €270,000 in 2018 and it's now worth €900,000. 

That's annual appreciation of 35% every year for the last four years? Really?


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## NoRegretsCoyote (23 Aug 2022)

Most likely the OP meant it was worth 70% of today's value on purchase.


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## Protocol (24 Aug 2022)

I wondered about that also.


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## pacmon (24 Aug 2022)

Thanks @Clamball - that's some great advice.  There might be a possibility to earn more, I'm considering some extra work so that I can pay the loan off even faster.  Might happen, we will see.

Yes, that's correct @NoRegretsCoyote - my choice of words was poor in that previous post @Sarenco @Protocol @PebbleBeach2020, but that is what I was trying to say, that several years ago it cost 72.77% of the current valuation... so 900k x 0.7277 = 655k.  The valuation was from a local estate agent a couple months ago.  Probably would have been clearer if I had said the house has appreciated by about 37% over the past years since we bought it, including the renovations.  Our previous house went the other direction (and quite badly) after the 2006/2007 property bubble, so it's nice to see it going in our favour this time around.


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## Sarenco (24 Aug 2022)

Thanks for the clarification, that makes sense.

And best of luck for the future.


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## _OkGo_ (24 Aug 2022)

pacmon said:


> Would this (company scheme with company matched contribution) be considered the fastest and most optimal way to build up your pension fund?


This is a bit of a red herring. While it obviously helps, it is more important for you to reach the maximum level of contribution that you can afford. At 50, you can contribute up to 30% of your income so you need to strive for this. The best way of doing this is for your wife to return to work as soon as is reasonable.



pacmon said:


> Cash/savings: 0


With the level of debt that you have (mortgage & home loan) and 3rd level on the horizon for the 3 older kids, you are likely to need additional loans when all 3 could be in university together. With a single income, you are at serious risk of missing payments and affecting your credit report which could make it very difficult to access loans in the future



pacmon said:


> Life insurance:
> Yes, cover for 400k+


You are massively under-insured. If anything happened to you, the €400k covers your debts. Your spouse would have no ability to maintain your current lifestyle even if they returned to work. The home would have to be sold to free up money. Ideally this wouldn't have to be done at least until the older 3 are through university and independent



pacmon said:


> Our mortgage is 3.15 times my gross salary, so it's bit under the new Central Bank lending loan-to-income limit.


IMO, this is a failure of the CB rules. You might have been within the limits but in your mid-40's with a single income, 5 dependents and no pensions, the bank should never have allowed you to borrow that amount as it is now putting you under pressure



pacmon said:


> there are lots of 3rd level colleges to choose from when the kids reach that age, plus they could live at home if the end up going to college in the area


This is not a choice but a necessity. As your kids approach 15/16, you should talk to them as adults and explain some of the financial choices you are making. You can't afford to pay their rent elsewhere so they have to choose a university closer to home. Encouraging them to get weekend and holiday work will also take the pressure off you



pacmon said:


> We manage our family budget in a large spreadsheet, every penny is accounted for from the moment I get paid each month. We change gas/electricity/broadband providers every year on the exact day the contract is up to keep costs are a bare minimum. Shop at discount supermarkets such as Lidl to keep costs down. Two cars in the household, both over 10 years old. Nothing fancy, no frills, no crazy expensive purchases, food is always on the table and bills/loans always paid, one "budget" holiday once a year... but yes, it is tight, especially with the cost of living these days.


This is encouraging that you have good control of your budget. You should be able to see how important it will be for your spouse to return to work and the impact that an additional €20/30/40k will have on your ability to fund pension and clear debt.

Overall, I don't think you should sell based on your ideal location for 3rd level (no rents) and the additional needs of one of your children. Its far more important for your spouse to have some form of income.

But even if you manage to get a decent pension fund together, downsizing is always an option when you your kids are independent which will further improve your quality of life in retirement. 

You have already made a lot of sacrifices to raise your family so don't start getting any strange notions (like many do) about keeping this home as the kids inheritance. There is a good chance that one of you could live to 90+ so your kids will be in their 50's before that is on the cards. Its much more important that you have a decent quality of life in retirement and selling your PPR should be part of that plan


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## NoRegretsCoyote (24 Aug 2022)

_OkGo_ said:


> IMO, this is a failure of the CB rules. You might have been within the limits but in your mid-40's with a single income, 5 dependents and no pensions, the bank should never have allowed you to borrow that amount as it is now putting you under pressure


I fully agree. These rules are the same for a 25YO as a 45YO. 

The younger person has of course longer to pay the loan off and is likely to see income increase over time. For the older person it's the opposite, earnings peak on average at about age 50.

I think that these rules are substituting for sensible risk assessment both by banks and borrowers. This was never what they were designed for. @pacmon  has a lot of debt for his age, income, and asset position. I think it could turn out well once spouse returns to work and large pension contributions start being made, but it's a lot of risk.

@_OkGo_ is totally right on life insurance. Something like €700k would be more prudent.


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## PGF2016 (24 Aug 2022)

_OkGo_ said:


> With the level of debt that you have (mortgage & home loan) and 3rd level on the horizon for the 3 older kids, you are likely to need additional loans when all 3 could be in university together.


The OP should not be taking on additional loans they can't afford. 

How about the adults (they will be adults) get jobs and pay for their own education? Or at least contribute to the costs. Maybe defer further education for 2-3 years until they are more mature, have a better idea of what they want to do and have some savings built up to help cover the costs.


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## Brendan Burgess (24 Aug 2022)

_OkGo_ said:


> IMO, this is a failure of the CB rules. You might have been within the limits but in your mid-40's with a single income, 5 dependents and no pensions, the bank should never have allowed you to borrow that amount as it is now putting you under pressure



The Central Bank rules are designed primarily to protect the banks from themselves. 

The OP will be able to repay this loan by retirement. 

They made a choice to have 4 kids and they can afford them although their retirement will not be as comfortable as it would otherwise be.  But that is a perfectly valid choice to make. 

Brendan


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## elcato (24 Aug 2022)

PGF2016 said:


> How about the adults (they will be adults) get jobs and pay for their own education?


This model is the most underused 'perk' in the country in a lot of cases. They should be encouraged to wait until they're over 23 before they decide to apply for a course. They can also be working and/or use the back to education grants. This gives them a way better chance or getting the course they want and making an informed choice as they are not competing with a rediculous best in class rather than most suited for model. It was only when I worked at the crappy, dirty, low paying jobs that I appreciated the 5 years of scrimping and studying that others did to be as smug as they were.


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## Harvard (24 Aug 2022)

pacmon said:


> *Personal details*
> 
> Age: 47
> Spouse’s/Partner's age: 49
> ...



Have you reviewed you tax credits recently? It might be worth looking into the home carers tax credit or the incapacitated child tax credit. Does your wife receive DCA? The crazy thing about your situation is that if you and your wife were earning the same combined income split say €79K & €27K the annual take home pay would be €5K higher.


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## pacmon (25 Aug 2022)

Thanks for such a great detailed reply @_OkGo_ - some very solid and thorough advice in your post.  We are already starting to look at plans for my spouse to return to work - not immediately, but probably in about a year from now.  I forgot to mention about a Death in Service benefit I have in my work.  If something happened to me, it would pay out about 400k.  And we're slightly over-insured on our life insurance at the moment, it is decreasing cover however.  If something happened, mortgage would be paid off so total cash would be around 490k... so I would hope that would last for a good bit of time, in order to figure things out.  Good advice as well about the important of going to 3rd level locally and starter jobs to take the pressure off us.  Looking forward to a time in the near future when we can finally start funding both pensions, and to maximise those contributions in every way possible. 

Thanks for the info @Harvard - yep, we have those tax credits and also DCA.  Every little bit helps in this area.


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## Purple (26 Aug 2022)

What is your wife's earning potential if she returns to work?
When they are all in school can she work part time? 
If that makes financial sense then hold off on worrying to much about your pensions until then.


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## Clamball (26 Aug 2022)

I don’t think you are doing too bad overall pacmon.  You are availing of all income, you are looking at ways to increase your income.  You are tracking all spending and making it all work for you.

You have 4 kids to raise including one with extra needs and hospital visits which takes so much head space to cope with, because no one expects a sick child.  It is not surprising your spouse is not earning, given that.

Your two big money worries are a pension which I would recommend availing of the work one, otherwise it is leaving money on the table, and you are right to consider how to fund your retirement.

The saving for the kids college is perhaps something that you are just not able to do.  It sounds like you will be able to support them very well until the end of their second level education but probably not beyond apart from bed and board if they go to college locally.  I would recommend explaining the financial situation to them, they probably know all about the spreadsheet.  Then encourage them to get part-time jobs, apply themselves to their course work, apply for prizes and grants and take out loans for fees.  Maybe encourage them to look at apprenticeships or other alternate routes to earning and studying.

If you need to choose, I think it is shortsited not to choose the pension first.  3% is very small but it may be all you can afford for a few years.


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