40, invest for retirement, pay of mortgage or invest in retirement home abroad

C

Corkman1984

New Member
Messages
4
Hello All,

Would love everyone's input here as I am torn between investing, putting money of mortgage or saving to purchase a retirement apartment in the Canary Islands(would rent until ready to retire).
I would ideally love to be retired by 60 but that may be a pipe dream.

Personal details

Me 40
Wife 38
No kids but trying

Income and expenditure
Me: 60k Bonus 10k
Monthly take-home pay: 3050 net after medical and pension contribution 25%

Wife: 60 k
Taking home about 3500 net


Type of employment -
Me: Full time PAYE in IT, private sector
Wife: Full time in Public sector, HSE

In general are you:

Me: Saving 1250 per month
Wife: Saving about 1k

Summary of Assets and Liabilities
Family home value: 290k
Mortgage on family home: 170k 2.9% fixed EBS (will be 4.5% next year)
Net equity: 120k

Cash: 25k (Credit union)
Wife: 10k (Credit union)
Pension fund: 47k
Company shares : 5k vested 45k unvested (will be 25k if vested after tax)

Total net assets: cash 35k plus 5k vested shares. 120k in house.


Family home mortgage information
Lender - EBS
Interest rate - 2.9
Type of interest rate: fixed for next 6 months. Will be 4.5% then I believe
Remaining term: 24 years
Monthly repayment: 830

Other borrowings – car loans/personal loans etc
No loans

Do you have a pension scheme?

Me - Contributing 25 % (6% employer contribution) with 47k pension pot
Mercer High growth (Keep or change?)
zurich.ie/past-performance-information-aspire

Wife - HSE single payment scheme


Other information which might be relevant
Wife considering adding to her pension through broker Corn Market for HSE



What specific question do you have or what issues are of concern to you?
1, Realistically could I retire by 55/60
2, Should I put 25 k of mortgage or keep for rainy day and start moving of 1250 a month of mortgage.
3, Would the purchase retirement property in Canary Islands be crazy (300k purchase price would require 100k cash savings so plan would be to keep my cash and save for next two years. Could also consider re-mortgaging house)
4, Get financial planner (is it advisable to have a local financial adviser or do user work with online financial advisers)
5, Move focus towards wife's pension.


I know there is a lot of questions and scenarios are very different so happy to take aby advice going . Thanks all in advance.
 
I'm sure you know this already however if you are fortunate to have kids (fingers crossed) then everything changes. Kid(s) are very expensive and having them slightly later in life (like we did) pushes everything out a few years.

I let other more learned people comment on the mortgage/pension etc.
 
If it were me, wife would max out pension to 20% and increase to 25% from the year she turns 40. I would want to hammer down mortgage. You will have a much better idea at 50 of what realistic retirement options look like. It depends on the lifestyle you'd be expecting and the gap to bridge to the state pension. I'd want to lock in 100% TCA state pensions x 2 (2080 PRSI each reqd). I'd probably retain the cash, or most of it, but not build on it. I think the retirement property notion is crazy.
 
Thank you
 
Your mortgage monthly payment is likely to increase at the end of this fixed rate. I would start looking now at potential switches to better rates on the market.

You've 15 years until 55 but have a mortgage with a 24 year term, personally I'd look to align paying off the mortgage with the age you want to retire.

In summary, I would divert most of your monthly savings towards overpaying mortgage and pension AVCs.
 
Thank you, sounds solid
Thanks will start checking out different rates for mortgage. Wife will have a call with Corn Market during week to discuss pension.
 
Corkman1984 said:
3, Would the purchase retirement property in Canary Islands be crazy (300k purchase price would require 100k cash savings so plan would be to keep my cash and save for next two years. Could also consider re-mortgaging house)
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Forget it, you are not even remotely close to this making sense for you. Any thoughts of it paying for itself would soon be proven to be incorrect and it will cost you money.

Much simpler to build your wealth and then reconsider something like this closer to retirement if it made sense
Corkman1984 said:
2, Should I put 25 k of mortgage or keep for rainy day and start moving of 1250 a month of mortgage.
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You also have the potential for AVC's for 2023 and 2024. You may be contributing 25% to your pension based on your salary (60k) but you are allowed to contribute 25% of your total earnings .

Have a look at your total earnings on your employee details summary on my revenue. With your bonus, health BIC and shares (if RTSO) , your total earnings could be €70-75k so there is another €10-15k on which you can contribute 25%

After that, just attack your mortgage and pay it down as much as possible
Corkman1984 said:
1, Realistically could I retire by 55/60
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This is highly dependent on a lot of things, especially if you have kids.

But being realistic, I don't think you are saving as much as you think you are. Most of your wealth comes from your PPR so if you bought in the last 5-10 years then all of the heavy lifting has been done by property prices increasing. How much of your wealth is added from your income?

If I was to guess, you are not really saving the €2,250 but are really just budgeting for ad hoc expenses e.g. cars. Maybe I'm wrong

There is nothing wrong with you enjoying your income now especially as you have a good income with no dependants. However, if retiring early is a genuine ambition then you need to know where every penny is going

Corkman1984 said:
4, Get financial planner (is it advisable to have a local financial adviser or do user work with online financial advisers)
Click to expand...
You don't really need one, invest in your pension and clear your mortgage is straight forward. But if you do search for an financial planner just be aware that many of them will just be looking to sell products to you to pick up commission
 
Thanks very much. Some very good points. I did not know AVC was on total earnings so will definitely check my earnings and top this up as first step.
 
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