# 7 year Semi Retirement plan



## 50andOut (7 Sep 2018)

*Age*: 43
*Spouse’s/Partner's age:* 45

*Annual gross income from employment or profession:*

PAYE: 105,000
Sole Trader: €13000
Spouse: Housewife / Rent a Room: €8000 (8 months)

The Sole trader income in only just starting now and I am not using this income in day to day spending as yet. I anticipate the Sole Trader income to increase over the next year and this will replace (albeit less after tax) the RaR income which is currently only done to cover all the various kid’s activities.

*Monthly take-home pay:*  PAYE €4500 + ST €600 / RAR €1000

*Type of employment*: Private + Sole Trader

*In general are you:* SAVING
*Rough estimate of value of home*: €500,000
*Amount outstanding on your mortgage*: €180,000
*What interest rate are you paying?  0.6%*

*Do you pay off your full credit card balance each month?* yes
*Other borrowings – car loans/personal loans etc.* Car loan 1.7% 425 p.m -  2 more years

*Savings and investments:* €16,500 rainy day cash – Saving 1000p.m on average – I plan to redirect this into the mortgage now the rainy day fund is established. Car loan completes in 2 years freeing up money to add to the fund if needed.


*Company pension.* I pay in 20% Company Pays 14% Value

*Current value*: 360K (contributions = 27.5k per annum)

*Spouse:* 190K (no longer contributing)

*Do you own any investment or other property?*  no

*Ages of children:*  11, 9, 6
*Life insurance:* Yes, both Mortgage protection and also main company provided

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


I believe we are very well positioned, and by diverting the monthly savings into the mortgage, we will pay this off in 7 years. We have no desire to move again. Also by this point I anticipate our combined Pensions to be worth roughly €1m (with an estimated 4% annual growth).

Ideally at 50, when mortgage free with a decent pension pot I can consider retiring from the PAYE career role.  The aim is to be ready at 50, with the plan to assess at that point if feasible. The pensions can then grow slowly as we move it to less risky investments without additional contributions until we are 60 when we would look to draw down.

If my spouse could go permanent in a Part time role, this along with my sole trader income, the relative take home difference as I see it, thanks to additional tax allowances, is not that great. 1 income of €100k Vs 2 inc on €20k – I believe we could both earn 20k and monthly take home would be around €3k – which will provide for our spending cover between age 50-60.

This is my 7 year plan, which on paper/in my head all seems reasonable. IS MY LOGIC SOUND or are there flaws/area’s I may not have considered?

The main unknown variable for me as I see it is the increasing costs for the kids as they get older Clothes/Entertainment/School/University. They will be at College Age as I hit 50 and the mortgage is cleared. At which point I guess assuming they all go, instead of retiring from the day job I’ll need to work from 4-9 more years with the mortgage payments being diverted to cover college fees.

Thanks in advance for any insight / probing questions. Even as I typed this up it was a help as I questioned why I don't divert the savings first to the Car loan - must check the option of early repayment there..

50+Out


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## Steven Barrett (7 Sep 2018)

If you retire at 50, have you thought about what you are going to do with all your spare time? Work prevents you from spending money. If your kids go to college, is there enough choice where you live so they can still live at home or will you need to pay for accommodation? 

If money wasn't an issue, what would you do? 


Steven
www.bluewaterfp.ie


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## 50andOut (7 Sep 2018)

Hi Steven

I would only be semi-retiring  - the corporate world is becoming a chore, made even more painful by my extra curricular activity which is a vocation. So I would continue to work on my sole trader activities from 50+.

I am wanting to be in a POSITION to semi retire at 50, but if the kids go to college, I unfortunately fully expect to need to continue working full time to support them which means I need to extend. Ideally it would be close by and they could still live at home, which if that was the case and costs were contained maybe it still viable to leave the day job at that point - but i'll only know at the time and want to be in best shape possible at that time to make the call if that makes sense.

if money wasn't an issue, right now plan would be the same, i'd just do it tomorrow

tnx


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## DeeKie (7 Sep 2018)

Sole trader status carries risk, unlimited personal liability. What sort of business is it? Change to a company.


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## 50andOut (12 Sep 2018)

Worth noting on the sole trader, but lets say its yoga classes, low possibility of any personal liability that's not covered by public liability insurance.

Anyone any thoughts on the numbers - am I dreaming based on our finances for early (corporate) retirement?

tnx


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## noproblem (12 Sep 2018)

I wouldn't be too worried in paying back the mortgage too quickly, you have it for practically nothing. Your car loans you can pay off if you want to as they're costing you more than your money can make. For a couple taking home over €1400.00 a week you have very little savings and with a growing family and the age they're at i'd imagine you'll be putting off the retirement for a while after your 50th birthday. I notice no mention of private health insurance? In my opinion that's important, one never knows what will happen, people finding out every day that life is not as predictable as imagined.


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## 50andOut (26 Sep 2018)

Thanks for the replies. Have full family health insurance provided by employer - an acknowledged cost which we would bear if I no longer was working.

The savings figure v take home pay is really only relative to now - prior to this year we were not earning those figures / had one off expenditures on the house. So its only now that we are settling into a more stable cost base that we are looking to plan ahead.

After watching the documentary's on at the moment about the housing crises, I might forget overpaying on my mortgage, as you say its dirt cheap,  in order to build up instead a big savings fund that we can access for the kids....so I guess i'll move over to the investments forum and start reading up.

Looks like that 7 year plan is more unrealistic than I figured

50+o


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## Steven Barrett (26 Sep 2018)

50andOut said:


> After watching the documentary's on at the moment about the housing crises, I might forget overpaying on my mortgage, as you say its dirt cheap,  in order to build up instead a big savings fund that we can access for the kids....so I guess i'll move over to the investments forum and start reading up.
> 
> Looks like that 7 year plan is more unrealistic than I figured



Why? Do you think that your kids want you to continue working so you can give them loads of money? Have you asked them? 

Every generation has difficulties and we all get through it.

Steven
www.bluewaterfp.ie


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## 50andOut (26 Sep 2018)

Maybe not (and never said i'd actually give them anything  i'll make them earn it) - I am just thinking aloud and summarising the feedback above of my situation. So it may be more prudent to have larger savings funds I can access for potential future events (college/houses) rather than paying off the cheap mortgage and not having that opportunity later to be able to use as required. The rate of return to beat/match the interest saved on the mortgage isn't out of reach.

60+O


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## Gordon Gekko (26 Sep 2018)

Hi 50andOut,

I hear you 100%. The thing I think about most when it comes to my retirement planning is being able to help out my kids.

Not to make them entitled layabouts; more from the perspective that, like most people, I’ve seen good people whose lives just haven’t worked out. It would kill me not to be able to help them, or indeed their kids. That’s not to say I will have to, but I’d like to see them with family homes in a nice part of Dublin (or wherever they choose).

Gordon


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## Steven Barrett (27 Sep 2018)

50andOut said:


> Maybe not (and never said i'd actually give them anything  i'll make them earn it) - I am just thinking aloud and summarising the feedback above of my situation. So it may be more prudent to have larger savings funds I can access for potential future events (college/houses) rather than paying off the cheap mortgage and not having that opportunity later to be able to use as required. The rate of return to beat/match the interest saved on the mortgage isn't out of reach.
> 
> 60+O



I understand what you are saying and as a parent myself, I would do anything to help my kids. 

But I have seen a lot of people get themselves in trouble because they have given their kids too much and some have had miserable retirements because of it. By all means help your children out.. if you can afford it. The financial planning process helps in this respect as it gives retirees an idea of how much they can afford to give their kids without running out of money. 

Steven
www.bluewaterfp.ie


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## 50andOut (16 Jan 2021)

Saw another thread do an annual update, so thought I'd do similar. 

Update - Age 46.  4 years to target

2020 Highlights:

Income combined Net €5.7k p.m.
Income: Up to €112k (moderate increase in base salary + bonus) sole trader business paused due to covid.
Income: Mrs €12k New part time role
Pension1: Maxed out contributions, coupled with market performance & company contributions, pot now at about €556k
Pension2 Mrs will start to contr 6% for company match for 2021. Existing pension due to market growth - c€240k
Mortgage: Now €150k - no overpayments due to 0.6% tracker.
Expenditure: €20k on house improvements increasing BER to B2 // €11k Maxed 2019 pension and also paid for U.K. N.I. backdated for 14 years gaining UK state pension entitlement
Savings & investments: €10k

2021 - 2025:

Pension: continue to max my contributions / + Mrs small 6% contribution (for employer match) +€42k p.a.
State pension U.K. - continue paying annually stamps
Mortgage: 12 years left, no adjustments
Income: Mrs, Not much scope for improvements as she only works 15 hrs a week (~12k pa)
Income: Mine,  expect small annual increments around 3% - €115k-€125k
Expenditure: No major expenditure planned, €12k p.a allocated for family holidays/entertainment ensuring we live now
Savings & investments: grow by €18k p.a
At 50
Combined pension est: €1.2m (€42k contr plus 5% growth)
Mortgage: €90k
Savings: €90k
Kids starting college @now, +2, +6 yrs

Future estimate

Annual Expense age: 50-57 - €55k-€65k (cost of living+mortgage+college fees)
Annual Expense age: 58-60 - €45k-€55k (cost of living+college fees)
Annual Expense age: 60+    - €35k-€40k (cost of living)
state pensions at 66/67/68(?): €12k Ireland + €10k U.K. Spouse €12k Ireland.

Target update: Still focussed on main review at 50 as planned and take stock.  Will likely continue working full time beyond 50 with target combined Pension figure of €2m or age 55 whichever comes sooner.


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## SPC100 (17 Jan 2021)

Mr. Market has certainly helped out a lot. Great progress, and congratulations on the uk pension.

Great to see the overall direction is processing well, even though the plan, like every plan, "didn't survive contact with the enemy"

Back of the envelope, you could retire fully by 50, only using your pensions! It seems that your 3! state pensions will nearly cover your expenditure once they kick in. to cover spending from age 50 to 70 you 'only' need a million cash at age 50. (Roughly 50k expenditure by 20years). and it seems your private pension will be more that that, and if you keep that pension invested you will likely still have private pension money at age 70.

Obviously saving more would help add comfort/increases inheritance/cover unexpected events/reduction in state pension/increase in pension drawdown age.

Other thoughts/ideas/questions:

I like your explicit budget for living now, how do you track and ensure you spend it?

In the year you turn 50 you can get relief on more of your income. You might want to factor that into your plans, it can accelerate your pension.

I see you updated your pension growth estimate from 4 to 6 p.c!

What are the charges on the pensions, who is it with and how is it invested?

Please investigate the 2 million fund threshold, as this might affect you.

You mentioned in the past moving your pension into safer assets as you approach retirement. For decades I have believed this to be an incorrect strategy. You might want to research on this point. Although if you get to 2M, it might be less relevant.

Have you planned in your Future expenditure, car purchase and a large surprise cost?

What's the plan if/when old age leaves you in need of assistance? (I guess the house equity is the default answer).


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## 50andOut (17 Jan 2021)

Hi SPC 

Thanks for comments.



SPC100 said:


> Back of the envelope, you could retire fully by 50, only using your pensions! It seems that your 3! state pensions will nearly cover your expenditure once they kick in. to cover spending from age 50 to 70 you 'only' need a million cash at age 50. (Roughly 50k expenditure by 20years). and it seems your private pension will be more that that, and if you keep that pension invested you will likely still have private pension money at age 70.
> 
> Obviously saving more would help add comfort/increases inheritance/cover unexpected events/reduction in state pension/increase in pension drawdown age.



This is exactly my thinking but also why I am adjusting the end date so as to add a buffer for potential market downturn or a change in pension legislation etc. It's a long gap between 50 and 66/67


Other thoughts/ideas/questions:

_I like your explicit budget for living now, how do you track and ensure you spend it? _I transfer 1k per month to my revolut which is purely for recreational use and this really helps to just use it guilt free without having to second guess "if its in the budget" it doubles as holiday fund.

_In the year you turn 50 you can get relief on more of your income. You might want to factor that into your plans, it can accelerate your pension. _It's included as a possible increase that to funding pension, although thats the start of uni years so one for the review a to that time.


_I see you updated your pension growth estimate from 4 to 6 p.c!_ I actually changed it to 5% purely as I was calculating in my head, (but obviously hoping for 8%+)

_What are the charges on the pensions, who is it with and how is it invested?_ Global equity low fees

_Please investigate the 2 million fund threshold, as this might affect you. _Won't get there, will move to ARF long b4

_You mentioned in the past moving your pension into safer assets as you approach retirement. For decades I have believed this to be an incorrect strategy. You might want to research on this point. Although if you get to 2M, it might be less relevant. _Agreed will be staying mostly in global equity after transition to ARF.

_Have you planned in your Future expenditure, car purchase and a large surprise cost? _Savings/Pension lump sum will cover

_What's the plan if/when old age leaves you in need of assistance? (I guess the house equity is the default answer). E_xpect personal pension will stIll be paying combined with state pensions to cover all 

50


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## mtk (17 Jan 2021)

50andOut said:


> Annual Expense age: 50-57 - €55k-€65k (cost of living+mortgage+college fees)
> Annual Expense age: 58-60 - €45k-€55k (cost of living+college fees)
> Annual Expense age: 60+ - €35k-€40k (cost of living)



deducing the figures for  college fee  and assocaited costs at 10k-15k seems kind of low imho. examples are :
under grad regis. fees and sundry 3.5k each per year. Masters double that at least .
loss of child benefit once over 18
travel costs
lunches out etc. 
social life !x3
increased private helath insurnace costs once over 18


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## NoRegretsCoyote (17 Jan 2021)

@50andOut 

One thing that's not clear. Do you live close enough to 3rd level for your kids to live at home? And is your house big enough to have five adults living in it?

My dream is for my kids to live away for college if they want to. I spent the best years of my life on a Dublin Bus crawling through suburbs and want to give my kids the chance to avoid this.

But back to you, even if you live close enough a child may need to study away. Also, would you want to be able to part-fund a post-grad or professional qualification? This could cost a lot.


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## 50andOut (17 Jan 2021)

mtk said:


> deducing the figures for  college fee  and assocaited costs at 10k-15k seems kind of low imho. examples are :
> under grad regis. fees and sundry 3.5k each per year. Masters double that at least .
> loss of child benefit once over 18
> travel costs
> ...


 
€10-15k per year is too low ?

I was thinking it would be around €7/8k for 1 with 3k reg fees and accommodation costs. The social aspect they can fund themselves.

Admittedly this is my main unknown and I am just using ballpark expense figures hence the large ranges and it will become clear only at my main review at 50.


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## 50andOut (17 Jan 2021)

NoRegretsCoyote said:


> @50andOut
> 
> One thing that's not clear. Do you live close enough to 3rd level for your kids to live at home? And is your house big enough to have five adults living in it?
> 
> ...



Walking distance to a Uni and they all have their own room so lucky in that respect, assuming it has preferred courses. Although the quicker I can offload them the better. Actually I would rather they went further afield to be honest as half the experience is the standing on your own two feet..

I haven't considered supporting beyond the undergrad. I would expect them to manage there. That said the pension lump sum will most likely be available if a suitable case was put forward, I think I will have a dragons den type set up for them to  access any additional support.

50


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## ginslia (18 Jan 2021)

Dragons den type set-up - love it!


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## SPC100 (18 Jan 2021)

For comparison and feedback would you be willing to break down your budget of 55k-€65?


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## 50andOut (18 Jan 2021)

Sure, all feedback is interesting.

 As follows with the Uni costs being the only estimate, everything else is actual (as at today)

Monthly - €4665 (€56k) - €5290 (€64k) depending on 1 or 2 at Uni the same time
1700 - household expenditure (food/petrol/school exp/clothing etc)
1090 - mortgage
1000 - living fund
250 - utilities (gas/electric/phones)
625 per child at Uni
--------

50


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## Cavanbhoy (20 Jan 2021)

If you retire at 50 and your gross income is less than 50k you wont have to pay college fees. When you have more than one child at college the income levels increase by roughly 4k for each of them.


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## Ndiddy (21 Jul 2021)

Cavanbhoy said:


> If you retire at 50 and your gross income is less than 50k you wont have to pay college fees. When you have more than one child at college the income levels increase by roughly 4k for each of them.


This is has been something bubbling in the back of my mind, that if I have enough pension funding and savings, it seems SUSI grant eligibility is based on income so would hope my kids would have fees covered.   Looking at the current application it doesn;t seem to ask for savings?


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## mtk (21 Jul 2021)

Ndiddy said:


> This is has been something bubbling in the back of my mind, that if I have enough pension funding and savings, it seems SUSI grant eligibility is based on income so would hope my kids would have fees covered.   Looking at the current application it doesn;t seem to ask for savings?


my recollection from a  year ago  is that it was very throrough on savings with lots of detail eg on state savings and more sophisticated allowing for  actual income on savings than social welfare means testing treatment of capital.


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## Ndiddy (22 Jul 2021)

mtk said:


> my recollection from a  year ago  is that it was very throrough on savings with lots of detail eg on state savings and more sophisticated allowing for  actual income on savings than social welfare means testing treatment of capital.


So would my understanding be right that it counts the income derived from savings but does not ding you for the actual savings amount?

I suppose I could also possibly work it that when we are 50 ( which for us will be a couple years before university going kids), we use some DC pension lump sum money to pay off mortgage, then we would have relatively low "income" from ARF and qualify for fee and maintenance grants?


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## 50andOut (22 Jul 2021)

based on the SUSI website and their grant Reckoner calc, it purely looks at income recd. 



			SUSI Eligibilility Reckoner - Get Started


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## 50andOut (22 Jul 2021)

+ this table goes into more detail of the grant - seems you can earn up to 39,875k for the student to still be eligible to receive full 100% maintenance grant + tuition fees

[broken link removed]


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## mtk (22 Jul 2021)

Ndiddy said:


> So would my understanding be right that it counts the income derived from savings but does not ding you for the actual savings amount?
> 
> 
> m


mainly correct but the guide is 33 pages long !


			https://susi.ie/wp-content/uploads/2021/05/New-Application-Form-Guide-2021-22-Draft-2.pdf
		

It looks like it takes into account a proportion of inheritances,
 capital gains and
redundancy payments ( e.g. see page 23 of the guide)  and
pension lump sums ( less clear!)......
It appears to be trying to be very sophisticated and more complicated than a tax return?!


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