Mid Life Review

[amanwithaplan]

I've been mulling over the next few years, and while it's impossible to predict the future, I've been trying to come up with a general plan. I thought I would ask people here who are smarter and more experienced than me. I'm also curious if there's any sort of modeling excels or programs that people use.

I don't enjoy my job, but it allows me to save. However, I wonder if it's paradoxical to work a job in order to save, in order to not need to work anymore. e.g. could I just skip ahead to taking on something new that doesn't feel so draining.


My actual personal spending is quite low. e.g. my main outgoings are pension and mortgage, both of which will tail off at some point.

Maybe wistful on my part, but I'm thinking when I'm 40 I've have added ~100k to my pension, and ~50k to my investment account. Potentially brining that to ~500k. Which at that age, could be enough, if left to compound for 15-20 years (CGT would reduce the investment account). At that point I can ease off and take a role with the view of covering mortgage and day to day. Do people do such tiered style retirement? Changing once they don't have to pay for mortgage/retirement?

Personal details

Age: 36
Number and age of children: 0


Income and expenditure
Annual gross income from employment or profession: ~100k total package
Type of employment: Private sector

In general: saving

Monthly:
Total pension contributions (incl employer) 2.1k per month
My share of mortgage is 1400, sometimes I overpay this
My share of monthly bills and running house: 600
Extra saving 1k a month to investment account

Summary of Assets and Liabilities
Home: 19 years left on the mortgage ~440k
Pensions: 275k
Investment Account: 60k
Both 100% equities.

Other borrowings – car loans/personal loans etc: 0

I don't hold any cash.

 

[Dr Strangelove]

My share of mortgage is 1400, sometimes I overpay this

Who do you share a property and mortgage with?

 

[AAAContributor]

I bought the house with my partner. They are younger than me, on similar salary, lower pension value, but high savings rate. We split all the bills 50/50.

 

[Dr Strangelove]

Does the OP ever expect to have kids and/or treat finances jointly like most adult couples?

 

[ClubMan]

Investment Account: 60k

What is this "investment account" exactly?

Annual gross income from employment or profession: ~100k total package

Total pension contributions (incl employer) 2.1k per month

I presume this means that you're maximising your pension contributions to your age related limit of 20%?

Home: 19 years left on the mortgage ~440k

What rate and type (tracker, variable, fixed)?

The question above about the possibility of children in the future is key as that would have a significant impact on plans and finances.

It's possible that you might be better advised to prioritise overpaying the mortgage over investing outside of your pension but that depends on the nature of the mortgage rate. As it is you are effectively borrowing at your mortgage rate to invest.

If you don't like your job then what options might you have for changing it or your career?

My actual personal spending is quite low. e.g. my main outgoings are pension and mortgage, both of which will tail off at some point.

What is your actual personal and household income and expenditure?
You won't know how much you need to retire or take a break from work without first knowing how much you realistically need to live on.

 

[amanwithaplan]

Thanks for the replies.

No current plans for children, everything would be adjusted if that changes.

What is this "investment account" exactly?

Funds invested in equities.

I presume this means that you're maximising your pension contributions to your age related limit of 20%?

Yep

What rate and type (tracker, variable, fixed)?

3.95% fixed for next three years.

What is your actual personal and household income and expenditure?

Personally, outside of what's for household, with holidays, and once off extras, it averages around 1.4k per month.


Annually Approx:
17k personal
17k Mortgage
7.2k Household bills
12k Equities outside pension
25.2k Pensions

 

[ClubMan]

Funds invested in equities.

Yes, but what is the actual product? Charges etc.?

7.2k Household bills

That seems very low for all non-mortgage outgoings associated with running a home housing two people. Even the ISI/Back on Track Reasonable Living Expenses for such a situation would be c. €25k and that's pretty much just for the basics.

Reasonable Living Expenses Calculator - Back on Track

backontrack.ie

 

[Brendan Burgess]

Home: 19 years left on the mortgage ~440k

Investment Account: 60k

Is that €440k owed jointly? or is the mortgage €880k in total. I assume the former.

Your key objective is to change job or change career.

I would normally suggest paying down the mortgage, but in this case the €60k could come in useful to tide you over a period of retraining or unemployment.

So leaving it invested in equites is the right idea.

 

[messyleo]

Would love a breakdown of the 1200 per month for all expenses for 2 people myself so I can copy it! Presuming that doesn't cover health insurance so worth looking at that with the loading with your age from now on imo

 

[Brendan Burgess]

Pensions: 275k

Age: 36

The key for you is flexibility. You have a good enough pension fund for your age. So don't make any further pension contributions which are not matched by your employer.

 

[Dr Strangelove]

You have a good income and level of assets for your age. You are pretty frugal but that’s a preference.


But if I was a 36YO living with a partner and owning a house together (maybe with kids in the future) I wouldn’t be thinking of my finances on an individual basis. So that’s the main thing I’d change.