# Advice needed re pension and long term savings/investment



## Peanuts20 (30 Aug 2021)

My boss recently announced he was retiring at the age of 53 after getting a large inheritance. It made me stop and think where I am in life.


Age:52
Spouse’s/Partner's age:50

Annual gross income from employment or profession:* 93000*
Annual gross income of spouse:* 18000*
Monthly take-home pay around *5,500*

Type of employment: e.g. Civil Servant, self-employed *both private secotr, I’m full time with an IT services company, wife is part time with a charity*

In general are you:
(a) spending more than you earn, or
(b) saving?
*Saving*
Rough estimate of value of home €225,000
Amount outstanding on your mortgage: €75,000
*What interest rate are you paying? Tracker: 0.95 above ECB Rate. Currently overpaying by approx. €200 per month*

Other borrowings – car loans/personal loans etc *None*
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: approx. *€55k in cash between bank and CU. There are additional funds also but those are ringfenced for a change in cars and some home improvements*.

*€30k in a monthly investment bond (€200 per month paid in) and a small amount of shares*.

Do you have a pension scheme?


*Current employment pension worth approx. €175k- currently I’m paying 5% and employer paying 7% of salary into it. *
*Previous Irish employer scheme (small, transfer value of approx. €35k)*
*UK employer scheme from a previous employer with a transfer value of £84k- Can take a pension on this at 63*
*Wife has a previous pension through an old employer worth approx. €250k*.

Do you own any investment or other property? *None and have absolutely no interest in investing in property*

Ages of children: *14 and 10*

Life insurance: *Yes, both on PR and through work

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

Firstly, I’m concerned my pension position is messy with 3 work pensions and whilst I am normally good with money, I find pensions confusing at best


Should I combine my 3 into1?
Should I be paying AVC’s or topping up what I and my employer pay in (I can do this via a “flex” arrangement which reduces my salary accordingly
What are the tax implications (if any) of bringing my UK based pension home?
I have 11 qualifying years of National Insurance contributions in the UK. I’ve seen mentioned before that you can “buy” more years. Is that correct?. Overall, what impact does a UK pension have on a contributory pension here?
Secondly, having sorted out some legacy family “stuff” I’m now focusing on saving for the future and especially if the kids wanted to go through college. Whilst we are living comfortably right now and have saved an additional €50k for some badly needed home improvements etc,  I feel we should have more put away at this stage of our lives. Ideally I’d also like to retire or step back from a pressurised role by the time I am 58/59.

Living down the country so if the 2 smallies decide they want to go to college in Dublin/Cork etc, I reckon I need to have €150-€200k (given the cost of student accom etc) to fund all of that and am probably half-way there at the minute. What’s the best way of investing over the next 5 years to get to the rest? I want to give them the best start I can

Any other advice gratefully received, we have a good health insurance package through my work and are in our forever home so in a very good stable position but could we do better?


----------



## Steven Barrett (30 Aug 2021)

On the pension side, you are underfunded given you salary. There is no need to consolidate your pensions. You can access your old one now but won't be able to if you transferred it into your current scheme. Likewise, you could also mature the policies later. On the UK one, it would have to be transferred to a QROPS approved scheme so probably can't be transferred to your employer scheme. As long as you are over 10 years out of the UK and over age 55, you can access it without penalty. 

Having kids later in life will have an impact on retirement. You will want to retire when you are facing a very expensive time regarding the children's education. To be able to reduce you work in 7 years time, you need to have funds in place asap, especially as rent will have to be paid if they go to college. It is more than likely that you will underfund your pension to pay for education. 

Work out what's needed for education. Make incremental increases to pensions. Then look at all finance and expenditure to see where/ if bigger savings can be made to boost retirement funding...without being miserable. 


Steven
www.bluewaterfp.ie


----------



## PebbleBeach2020 (30 Aug 2021)

Where are you getting 150-200k for two children's third level education???

100k for the two of them would be too high unless you are funding their social lives as well.


----------



## Gordon Gekko (30 Aug 2021)

Not doing AVCs, overpaying on a tracker mortgage, and sitting on €55k in cash plus €30k of investments…

That’s absolutely crazy.

You need to do an AVC for last year and this year and start maxing out your AVCs.

And look at how the pension funds are invested.


----------



## Brendan Burgess (30 Aug 2021)

Peanuts20 said:


> Should I be paying AVC’s or topping up what I and my employer pay in (I can do this via a “flex” arrangement which reduces my salary accordingly



Yes. Stuff your pension with as much of the flex as is allowed.

Stop overpaying your tracker. 

I don't think your wife gets any tax relief by contributing to a pension, so she shouldn't contribute anything. 



Peanuts20 said:


> *€30k in a monthly investment bond (€200 per month paid in) and a small amount of shares*.



I don't like the sound of this. Usually these monthly savings plans have high charges. Check out the charges. It would be much better to be stuffing this money into your pension fund. 

You will need an education fund in 4 years. So at that stage, you will stop  contributing to your pension fund other than the minimum required to get the employer contribution.  But it's better to stuff it now and then take a break, than to do it evenly over the years and have your cash sitting wherever you have it doing nothing.

Brendan


----------



## Peanuts20 (31 Aug 2021)

PebbleBeach2020 said:


> Where are you getting 150-200k for two children's third level education???
> 
> 100k for the two of them would be too high unless you are funding their social lives as well.



2 kids by 4 years in any University in Ireland is around €35k in capitation, levys and other fees and depending what course they do and where they do it. These fees range from around €3k in UCC to €5k-8k in UCD

if you assume house share (and not student accom) for 9 months of the year then you are looking at €500-€800 per month in rent, that's another €50k gone for the pair of them

Throw in food, books, laptops, broadband, mobile phones etc etc then you are easily past the €100k at current prices (and look at the way rent rates are going at the minute, what will they be like in 8 years time??). 

And that's assuming both of them don't decide to do masters which more or more kids are, or decide they don't want to do something like vet or medicine.

And yes, I would expect them to go out and get a part time job and try and fund and save for it themselves but the harsh and cold reality is that sending kids away to college is expensive.


----------



## PebbleBeach2020 (31 Aug 2021)

Peanuts20 said:


> And yes, I would expect them to go out and get a part time job and try and fund and save for it themselves but the harsh and cold reality is that sending kids away to college is expensive.


it is, but not 150-200k expensive.


----------



## PebbleBeach2020 (31 Aug 2021)

perhaps look at purchasing an apartment close to a college they are thinking of attending. That makes sense if looking at 4 year degree and then a masters in the college. 5 years rent by 2 people, plus all the bills.


----------



## Brendan Burgess (31 Aug 2021)

Peanuts' priorities now are to balance the need to stuff their underfunded pension with the need to fund their children's third level education.  It is not to invest in property.

If he had a well funded pension scheme and spare cash to buy an investment property, then it _might _be worth considering. 

Brendan


----------



## Gordon Gekko (31 Aug 2021)

I really think the underfunding of the pensions is the red flag here


----------



## PGF2016 (31 Aug 2021)

Peanuts20 said:


> 2 kids by 4 years in any University in Ireland is around €35k in capitation, levys and other fees and depending what course they do and where they do it. These fees range from around €3k in UCC to €5k-8k in UCD
> 
> if you assume house share (and not student accom) for 9 months of the year then you are looking at €500-€800 per month in rent, that's another €50k gone for the pair of them
> 
> ...


While they may be your kids they will be adults by the time the get to third level. How about they work for a year or two prior to attending university and save to fund themselves to some extent? Has the added advantage of them being more mature and hopefully better able to handle themselves and their money.


----------



## Steven Barrett (31 Aug 2021)

PGF2016 said:


> While they may be your kids they will be adults by the time the get to third level. How about they work for a year or two prior to attending university and save to fund themselves to some extent? Has the added advantage of them being more mature and hopefully better able to handle themselves and their money.


How realistic is that? 

And if they work at 18, how much are they going to earn that they can have a few quid for themselves and part fund college? then there's the risk that they like having a job and don't want to go to university and end up in a job with a very low earnings ceiling, which may be fine for an 18 yo but not great for a 30 year old. (I know there are plenty of good jobs that you don't need a degree for, so don't @ me).


----------



## noproblem (31 Aug 2021)

A lot of the so called degrees/diplomas that are rewarded today wouldn't get you a job packing shelves on night shift.


----------



## PGF2016 (31 Aug 2021)

Steven Barrett said:


> How realistic is that?
> 
> And if they work at 18, how much are they going to earn that they can have a few quid for themselves and part fund college? then there's the risk that they like having a job and don't want to go to university and end up in a job with a very low earnings ceiling, which may be fine for an 18 yo but not great for a 30 year old. (I know there are plenty of good jobs that you don't need a degree for, so don't @ me).


I don't see what's unrealistic about the proposal. Yes, they won't earn a huge amount but I still think there are benefits from the work and life experience.

And I don't think the risk of them foregoing university for good is overly high. I, myself, had the opposite experience. I worked jobs with low earnings ceilings for a year before starting my degree. It made me want to get a degree and earn better money.


----------



## Peanuts20 (1 Sep 2021)

Just on the University side of things, I've no issue if they want to go off and get and apprenticeship and become a plumber or electrician or whatever, as long as they are happy with their career choice. What is clear however is that for a lot of jobs, the basic BA/BBS/BComm is no longer enough to even get you in the door with Masters now almost standard in a lot of ads. Given the fact that secondary school is 6 years now and not 5, it could mean kids still being in college at 23/24. And that costs.


----------



## noproblem (1 Sep 2021)

Peanuts20 said:


> Just on the University side of things, I've no issue if they want to go off and get and apprenticeship and become a plumber or electrician or whatever, as long as they are happy with their career choice. What is clear however is that for a lot of jobs, the basic BA/BBS/BComm is no longer enough to even get you in the door with Masters now almost standard in a lot of ads. Given the fact that secondary school is 6 years now and not 5, it could mean kids still being in college at 23/24. And that costs.


Plenty of them at home with Mammy and Daddy doing Phd's, Doctorates, etc at 30 years of age. Heads filled with data and facts, figures, etc. You name it, they have it, but wouldn't be able to have a chat with you about anything. Then they go out into the world and get a big hit of reality. I'd even go as far as saying, there's a few of them on here There must be a great sense of worth in people who leave school early, work hard, know what they're at and end up hiring the very smart people who had a giggle at them going to school because of their inability to swat the books.


----------



## gianni (1 Sep 2021)

I don't think education is ever a waste of time.


----------



## noproblem (1 Sep 2021)

gianni said:


> I don't think education is ever a waste of time.


Agree to a point, but a little bit of everything gives balance. Heading out into life at 30+ wouldn't be my idea of life, but everyone to their own I guess.


----------



## raisinette (12 Sep 2021)

PebbleBeach2020 said:


> perhaps look at purchasing an apartment close to a college they are thinking of attending. That makes sense if looking at 4 year degree and then a masters in the college. 5 years rent by 2 people, plus all the bills.


Thought of doing this ahead of my 3 heading off but glad I didn't - in the end they went to three different colleges in three different cities!


----------



## cremeegg (12 Sep 2021)

The bottom line here is that for a family with a high income your capital position/savings are low. You will probably need to keep working until the younger child is financially independent.

You are 52, your younger child is 10. In 13 years you will be 63, the child 23.

Every year earlier than that you retire is a loss of €93k gross. No investment strategy will alter that.


----------

