Considering moving to ps from private at 42. Financial concerns

C

colin79ie

Registered User
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Age: 42
Spouse’s/Partner's age: 39

Annual gross income from employment or profession: 90000
Annual gross income of spouse: 38000

Monthly take-home pay 4500/2000

Type of employment: e.g. Civil Servant, self-employed;
Private sector PAYE, both

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving 2k per month approx between us but lifestyle creep means it's hard to build it up. (around 1k goes for college funding now, on the go...)
8k in credit union , 5k in wife's savings account.

Rough estimate of value of home; 140000
Amount outstanding on your mortgage: 60000
What interest rate are you paying? 1.8%
6 years left.

Other borrowings – car loans/personal loans etc
Car loan 13000. 490/month. 2.5 years left.
No other loans

Do you pay off your full credit card balance each month? Yes. Rarely used.
If not, what is the balance on your credit card?

Savings and investments:
College fund 15k. 1st child just started so spending has begun.
Just started a new 5 year investment account for 2nd child. 300/month.
Started saving late for college...

Do you have a pension scheme? Yes. Contribute 15% (10+5). Current value 216000

Do you own any investment or other property?
No

Ages of children: 19/15

Life insurance: death in service 2 X salary
Life policy. 200k each. 80/month.

Have a quote for specified health for 120k at 80/month to replace the standalone life cover. Can't get income protection due to job. (Took advice on protection policies)


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

Possible job in ps, AP grade 69-85k.

Main concern is whether it makes financial sense. Ps pension entitlement from starting at 42 doesn't appear great.

Currently, my salary is used for the day to day/bills etc. By month end it's close to zero.
Wife's salary is used to fund the college stuff and save for future college stuff. It's also used for things like clothing etc.
Generally don't consider weekly shops or planning. Just get what's needed.

Rarely go out, maybe once a month.

Looking at *roughly net monthly pay in the new position of 3500, so it would be necessary in the short term to try and reverse the years of lifestyle creep .

Am I overthinking the pension scenarios given that I also have a private one?

We are in our 'forever' home so I had planned on paying the mortgage amount into the pension when it finishes.

The main reasoning for applying for the ps job was because I spend 80% of my time away from home for work, overnighting away up to 150 days per year.
The new role would leave me home every night with a 40 min commute. It just means a 20k pay cut ...
 
I presume you are aware of the Single Public Service Pension scheme. This is not as attractive as it's predecessor as it's based on career average earnings as opposed to final salary.
 
Yes. However, my grade is higher level to the average isn't too bad, notwithstanding any future promotion or increases.

It's the time served which will bring it down
 
I've no financial qualifications. But, reading through Colin79's post the only question is:- I need a better quality of life (especially within the confines of home life); should I take a huge drop in wages and perhaps a drop in eventual pension?

From where I sit the answer is Yes (the case for 'No' doesn't blow the sails here). What you've got Colin money can't buy.
 
One thing that strikes me is that travel and subsistence claims might be subsidising your lifestyle in a way you are not aware of. You would lose this with the PS job.

colin79ie said:
We are in our 'forever' home so I had planned on paying the mortgage amount into the pension when it finishes.
Click to expand...
You can still do this.
 
A few things:

  1. Lifestyle creep - Once you start spending on things, it is hard to go back. You need to make a list of all of your expenditure and see what you can cut back on. Make a conscious decision to cut back on those items and also plan on how to afford other items such as family holidays.
  2. You are 100% correct on the PS pension. When you join later in life, the career average has a lower impact as you start at a much higher base. And while you will be short on time served, you also have a DC pension, which you can access earlier if you want.
  3. You had kids when you were young enough, meaning they will be off the books quicker, giving you more time to catch up. Your mortgage will also be paid off in 6 years and you can redirect that money into AVCs.
  4. There are stages in life when money is tight and there's no spare cash for AVCs or investments. That's fine. A lot of those expenditures will pass and you will free up cash.
  5. Being away from home for nearly half the year is hard. Never mind all that you are missing out on, travel is hard and tiring. And when you get home, you may be tired and irritable. You may want some rest to recover. And that's without talking about the impact it has on your wife and kids. What price would you put on that? More than €20K?

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
NoRegretsCoyote said:
One thing that strikes me is that travel and subsistence claims might be subsidising your lifestyle in a way you are not aware of. You would lose this with the PS job.


You can still do this.
Click to expand...
You could be right, to some extent. Although all expenses are vouched, I'm not eating/drinking or consuming at home.
I certainly don't gain directly from any expenses.
Steven Barrett said:
A few things:

  1. Lifestyle creep - Once you start spending on things, it is hard to go back. You need to make a list of all of your expenditure and see what you can cut back on. Make a conscious decision to cut back on those items and also plan on how to afford other items such as family holidays.
  2. You are 100% correct on the PS pension. When you join later in life, the career average has a lower impact as you start at a much higher base. And while you will be short on time served, you also have a DC pension, which you can access earlier if you want.
  3. You had kids when you were young enough, meaning they will be off the books quicker, giving you more time to catch up. Your mortgage will also be paid off in 6 years and you can redirect that money into AVCs.
  4. There are stages in life when money is tight and there's no spare cash for AVCs or investments. That's fine. A lot of those expenditures will pass and you will free up cash.
  5. Being away from home for nearly half the year is hard. Never mind all that you are missing out on, travel is hard and tiring. And when you get home, you may be tired and irritable. You may want some rest to recover. And that's without talking about the impact it has on your wife and kids. What price would you put on that? More than €20K?

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Click to expand...
Lifestyle creep is awful. It should be warned against at school
I often wonder how we managed when my salary was lower....
I do realise that we need to review all expenditure and see where we need to make adjustments.

The kids should be off the books by the time I'm 50, all going well. Both are doing uni in NI which is much cheaper than ROI overall.

Perhaps I'm looking too negatively at the pension scenario. I ask myself if I started a new private sector job at 42, and had no pension, would I build a better pension than the ps one?

In terms of travel, yes it's hard. More mentally than anything. I get good time off but everyone else is at work during the week .
I enjoy my actual work but for the past couple of years I've sort of 'mentally resigned'. Someone once told me that the travel gets harder as you get older. I see it now.
I've missed all the big occasions. Birthdays, anniversaries, weddings, funerals etc., and my long suffering wife deserves better after many years .
Is it worth 20k? I would hope so.....
 
Overall you are not in a bad position at all. The lifestyle you have described can be grueling so you are probably making the right choice to move and now you just need to figure out the best way to facilitate that financially.

Have you considered remortgaging to a longer term? While the thought of clearing it in 6 years is very enticing, it also coincides with a very expensive period in your life with 3rd level costs and trying to manage a potential reduced income. Why not look at switching to a 12-15 year term to reduce the minimum monthly payment. You would effectively be funding university with a very low cost mortgage and you still have the option to overpay when it suits you.

NoRegretsCoyote said:
One thing that strikes me is that travel and subsistence claims might be subsidising your lifestyle in a way you are not aware of. You would lose this with the PS job.
Click to expand...
This is a very important point. It's worth checking how much you spend on an average day through expenses. Obviously at home you will not be eating lunches and dinners out as much but you will definitely notice it in your groceries bill if you go from ~180 days of vouched expenses to having to feed yourself.

colin79ie said:
Currently, my salary is used for the day to day/bills etc. By month end it's close to zero.
Wife's salary is used to fund the college stuff and save for future college stuff. It's also used for things like clothing etc.
Generally don't consider weekly shops or planning. Just get what's needed.
Click to expand...
I think you need to look at how you manage your money as well. It's an easy habit to fall into to partition your money into who pays for what but ultimately its all the same so you should pool it in one account and pay for everything from that. It gives much greater visibility of where money can be saved.

Even simple things down to cancelling unused subscriptions and memberships, switching to sim-only mobile plans could save a lot of money for a family of 4 without impacting your standard of life at all.
 
Thanks.
Our mortgage is not huge, 730/month on a decent tracker rate. I would prefer to get it paid off and out of our lives after 20 years.

My short term consideration is the car loan. It's 13k with our credit union at 8%, paying 490/month. I have 15k sitting making zero in the bank.
Although that's the 'college fund', I'm considering using some of that to reduce the loan and save on interest.
I had considered paying off the loan entirely and then paying the loan repayment back into the fund to build it back up again. This year's college fees are all paid up so it would be next year before the next big bills arrive .
However, I'm always nervous about leaving myself short .

I try to keep focused on the potential job and the fact that, although it's a significant pay cut initially, the increment will bring me back up to close to where I am now, albeit in a few years.
 
Just to play devils advocate, again. I know of three people working in AP roles and, while there are not as much demands regarding travel, there are lots of demands on time. Demands that are not commensurate with renumeration, in my opinion. If you are banking on an AP role being an easy work/life balance, this isn't always the case.

That said, you sound like someone who is looking for a change. If you are living within distance of a city you will always have options regarding employment.
 
colin79ie said:
Rough estimate of value of home; 140000
Amount outstanding on your mortgage: 60000
What interest rate are you paying? 1.8%
6 years left.
Click to expand...

colin79ie said:
730/month on a decent tracker rate
Click to expand...
These figures do not add up, either the balance, interest rate or term left is incorrect

colin79ie said:
I have 15k sitting making zero in the bank.
Click to expand...
You actually have €28k between your own, your wife's and the college savings. Again I think you need to change how you look at your money and get out of the habit of organizing your finances by pots of money. If you clear the loan, you still have €15k on hand and you will free up €490/month to start topping this up for next years fees.

Likewise if you were to remortgage to a 15-20 year term, you could potentially free up €300-400/month to be used for funding college or pensions. You can still overpay the mortgage to clear it early but the longer term gives you options and flexibility. I know you would prefer to be done with the mortgage, it can be a nice psychological boost to be mortgage free but there are also good reasons to extend it now such as:
  • Topping up your own pension with AVC's (I know practically nothing about PS pensions, others on here do)
  • Topping up your wife's pension (you haven't mentioned it but it is part of your total financial picture)
  • Having cash flow to pay for university fees
  • A bad idea is to extend and waste the cash on consumer debt such as newer more expensive cars
Once you are finished paying fees for your second child, you could then redirect all excess cash to clear the mortgage. In reality you might still clear it in 8-10 years but you have given yourself a lot more freedom in that time to do as you choose with your money
 
These figures do not add up, either the balance, interest rate or term left is incorrect
Click to expand...

The mortgage information was a rough estimate. We had a small equity release which I had combined in my previous post. (I know, I know). I was more concerned about the specifics of the new job and pension.

However, thanks to all the great insight here, I have already realised I need to change my money management and set different priorities in a different way perhaps.

So, the current situation is below.

Mortgage: Main mortgage is 39k remaining. 1.25% BoI tracker. 506 per month. 7 years left.
Equity release is 30k remaining. 2.9%. BoI 2 Yr fixed. 275 per month. 10.5 years left (Home improvement. 15 yr term)

Loans: Car loan 13.5k remaining. 2.5 years. 491/month

Savings: Bank - 13.8k (The 'college fund')
Credit union - 7.4k (own account. This was supposed to be the rainy day fund but we tend to use it for the likes of car insurance, any unforeseen expenses, car maintenance etc. I pay 600/month into this.
- 2.5 k (wife's account). This was her old account but we kept it and pay 200/month into it. It was planned to use this for the likes of any house needs, furniture, medical stuff or other smaller expenses. For example, new sofa due in November, with a 1k balance to pay on delivery. Child brace payments, 600 left, etc .
Bank - Approx 4-5k in wife's savings account. This is earmarked to pay for short term college expenses, and stuff like clothing, entertainment etc.
Zurich - Just started this month - 300/month investment account for 5 years for college goer number 2.

Pension : - Employer group pension with Aviva.
- Paying 12% + 5% company contr.
- Current value 218,000

No credit card balances. Tend not to use them.

VHI is a big cost at 176/month for 4 of us. Its a basic hospital plan.
Phones/broadband is 100/month for everyone, family plan + home broadband included.
Electric - roughly 90/month
Pet insurance - 30/month
Life insurance - 106/month. (86 joint + 20 mortgage)
Sky - 36/month
Netflix - 11/month
LPT + TV license - 23/month

Just to note, all this comes out of my own salary, approx 4500/month net. My wife's salary paid the college fees this year in installments and she saves what she can + normal female spending on 'stuff'!

The rest is lifestyle I guess.
We have never done a weekly shop and that annoys me but due to me being away it isn't always practical. If I'm at home I just get what's needed day to day. Can be impulsive as a result.

A new, PS job on the AP grade would (as far as I can figure out pension and tax deductions) give me a net of approx 3550 initially.
 
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