41 looking to retire at 50... possible ?

Plan B is Benidorm. Cheap apartment, cheap beer and food,
and "knees up mother brown" cabarets each night.
 
fistophobia said:
Plan B is Benidorm. Cheap apartment, cheap beer and food,
and "knees up mother brown" cabarets each night.
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Then he can definitely retire at 50. He'll only need to fund about 10 years.

Until the OP answer Huskermu's questions it's pointless going any further in the discussion.

And retiring early might not be the holy grail some think. It's not for everybody.
 
For me there are 3 questions the OP needs to answer first before they can start thinking about retiring at 50
1. Why do you want to retire at 50
2. How much does it cost to fund your lifestye at the moment
3. What type of lifestye do you want when you retire and how much will that cost to fund.
 
teaandbiscuits said:
Age:
41

Spouse’s/Partner's age:
42

Annual gross income from employment or profession:
120k

Annual gross income of spouse:
100k

Type of employment:
Both multinational

In general are you: (a) spending more than you earn, or (b) saving?
We are saving, our target save is 50k/year

Rough estimate of value of home:
350k

Amount outstanding on your mortgage:
Paid off

Other borrowings – car loans/personal loans etc:
None

Do you pay off your full credit card balance each month?
Yes

Savings and investments:
240k in 5 year savings certs
220k split between various accounts (current, regular savers, short term fixed, credit union etc)
10k in Irish shares (BOI, AIB) via Degiro
60k in US domiciled Vanguard ETFs (4 fund Bogleheads-type strategy) via Degiro, investing approx 1000 / month, intend to buy and hold long term.

Do you have a pension scheme?
Me: 350k split over 3 pensions, including a current company scheme that I am contributing the max 25% to.
Spouse: Will be starting to contribute to one this year

Do you own any investment or other property?
No

Ages of children:
None

Life insurance:
Via work scheme, no separate policy

What specific question do you have or what issues are of concern to you?
Our previous financial goal was to pay off the mortgage. Now that is done our next goal is to plan for early retirement around 50. We plan to do that by maxing pension contributions and saving/investing

We have 2 questions we'd love some advice on:

1. We're working the numbers to try and see if early retirement is achievable. Any input would be appreciated. Or even questions to get us thinking the right way.

2. Apart from the pensions and the savings regime we are not sure how best to invest our money to further this goal. Basically we're good savers but not so great investors!
The 220k in various accounts is not really doing anything, so trying to find a home for that is a priority. We're somewhat paralyzed with indecision on what to do here.
- We think that translating some/most of that into ETFs is probably the way forward, but concerns about the current market means we're dripping the money in rather than buying in bulk. We're also somewhat concerned about the safety of those ETFs if Degiro was to have an upset and we had a large holding.
- Investing in a fund (Zurich, Irish Life etc) would also be an option but the 8 year deemed disposal and tax treatment doesn't seem to make this attractive vs the ETF option.
- Direct share investment is not something we're confident on our ability to do well (hence the ETF indexed funds approach)
Not sure what other options are out there, I guess we are somewhat risk-averse and scared to commit to something high risk. Again any advice would be appreciated

Thanks for reading!
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One item that has been overlooked is your savings rate. You're not actually saving that much for someone with no kids or mortgage who wants to retire early. You should be living off the lower income and saving the full second income at the very least. Come retirement you'll probably be living off less again.
 
PGF2016 said:
One item that has been overlooked is your savings rate. You're not actually saving that much for someone with no kids or mortgage who wants to retire early. You should be living off the lower income and saving the full second income at the very least. Come retirement you'll probably be living off less again.
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That second income after tax is about €61,000. So they're not far off it.
 
PGF2016 said:
I was suggesting living off the lower salary and saving the higher salary. 61k sounds like the after tax income of the lower salary.
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You're correct, it is. I misread your post, I thought you meant live off the higher salary and save the lower salary. My bad.
 
You can definitely achieve this worthwhile goal, I retired at 47 leaving my job on a severance package, I would have been planning like you on a 50 departure and was working towards that but it came a tad earlier for me. I did not have the same assets you outline or salary for that matter, now in my 50's life is good, I worked hard for maybe ten years double jobbing and investing in yielding property assets that are working a treat ( all offshore in a company, taxes paid before the masses jump on it ).

This is a solid life goal, well done for focusing, it will take effort and planning but the rewards are tremendous in terms of life flexibility and all that that means to individuals, each one is different but do ensure you have income from some source post age 50 - property or pension or ideally as in my own case, both.
 
On one point mentioned above, I don't believe anyone on Eur100k gross and making any kind of pension contribution is bringing home a net of over Eur5k per month. The days of effective tax rates being 40% are no longer with us, (and I do mean effective, not marginal tax rates). With a salary of Eur100k, possibly BIK on health insurance (a likely benefit on that salary in a multinational) and contributing even 10% to a pension is going to being to bring someone down closer to Eur4.5k per month and if only starting a pension now, at a 20%contribution, nett per month would be down just under Eur4k per month which is Eur48k per annum and a long way off Eur61k. These numbers can be easily run on the deloitte tax caluculator webpage
 
Thanks all for the great feedback. Lots to consider here. Just back from travel with work so need to digest all of this!
 
fistophobia said:
Which Vanguard ETFs are you invested in? Are you aware of US estate taxes on amounts over 60K
These are USD denominated funds, correct? Currency risk?
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Hi, yes USD denominated. ETFs are Vti, vxus, bnd, bndx. I understood a non us broker would result in no estate tax from another AAM thread. Sounds like i need to confirm that thanks!

mtk said:
1. Max spouse's pension contribution too
2 I agree with you about lack of confidence in picking ind, shares(. Me too)
3 whether you will Have enough at 50 depends on your after tax spending ....etc etc do a budget and analyse your expenditure .
4 Overall I would say unlikely ( IMHO) given current net worth is 1.2 million including house . Save hard and you might get to 2m by early 50s . (Is that enough 40 years at 50k a year is 2m?... Who knows ?)
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Super feedback thanks. We did a budget and estimated spending would be 35k/year including some contingency.

PGF2016 said:
Questions for @teaandbiscuits: Are you open to downsizing or moving to lower cost geographies?
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Hi, yes we are certainly open to moving in Ireland. My wife wants to live in the country and keep chickens! Other countries? maybe, have lived abroad in the past and liked it. Our current house is a 2 bed so little room for downsizing.

huskerdu said:
teaandbiscuits - you cant answer the question until you have estimated what income you think you will need to fund your life.
You will need to fund approx 37 years. and don't forget inflation.
.
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Yes I should have included this in the original post. We had estimated 35k a year and had increased this by 2% a year to account for inflation. Not sure how realistic a inflation buffer that is.

Cervelo said:
For me there are 3 questions the OP needs to answer first before they can start thinking about retiring at 50
1. Why do you want to retire at 50
2. How much does it cost to fund your lifestye at the moment
3. What type of lifestye do you want when you retire and how much will that cost to fund.
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Good questions!
1. Tired of working, want to enjoy life while young enough to do so. Lots of hobbies and interests but no time.
2. We've started to track this seriously now, the answer we always had before was "not much" but we may be in for a surprise
3. Comfortable nothing very extravagant, our interests tend more towards the outdoors than expensive things and big nights out. Run one car.
Sorry it's late here and I'm on a tablet (hate typing on these things!), hope the above makes sense.

Purple said:
All of these discussions leave me thinking that living for today with an eye on tomorrow is the best way to go.
We don't know what the future holds, man plans and the gods laugh and all that.
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Great point and we agree. It seems like today is all about work though which is wearing us down!
 
The way to retire early is to have a high savings rate and clear the mortgage. This has a dual effect - increases your stash and reduces what you need to live on - you train yourself to live on less. For those of us who did it closer to age 40 (me included), the AVC and pension route is of no use. I would focus on eliminating or reducing recurring costs. I do not want 25% of my money in a lump sum, an ARF, an annuity or to be tied into financial products.

The end goal is the same - financial independence.
 
It is a crying shame that opaque charges, poor investment strategy, and bad press seem to have turned many people off pensions.

There is no better way to save for retirement.
 
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