52 year old with chronic health issues - how to ensure financial security for the long term?

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Errigal1983

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I’m a married 52 year old with chronic health issues. We’ve recently sold an investment property as I cannot manage the overhead of being a landlord. I’m trying to ensure financial security for the long term for my family and me. Advice welcome! Thanks.


Personal details
Your age: 52
Your spouse's age: 53
Partner's age if not married: N/A

Number and age of children: 4. (2 teenagers, secondary school, two younger ones in primary). All are bright and academic, so likely all will go to 3rd level.
No plans to send any to private school, local public primary and secondary schools are both good, fortunately.


Income and expenditure
Annual gross income from employment or profession: 74000
Annual gross income of spouse/partner:…….. 35000

Monthly take-home pay: 5900

Type of employment - PAYE Employee (me - private company)
Spouse: public servant

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving

Summary of Assets and Liabilities
Family home value: 600k
Mortgage on family home: 0
Net equity: 600k

Cash: 645k
Defined Contribution pension funds: 506k
Company shares : 450k
Buy to Let Property value: N/A. sold late last year, hence the cash savings.
Buy to let Mortgage: N/A
Managed fund: 75k
Total net assets: 2.3M (including pensions and our family home, but you need a roof over your head, so ...)

Family home mortgage information N/A

Other borrowings – car loans/personal loans etc
None

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

If not, what is the balance on your credit card? N/A


Pension information
Defined contribution funds. Value of pension funds (mine and husband's from prior private sector employment): 506k

Buy to let properties N/A
Had one, sold last year.

Other savings and investments:
75k in managed fund (moderate risk, mix of asset classes - equities, REIT, commodities, bonds). Invested through a broker in this.

Other information which might be relevant
See note regarding my health situation below.

What specific question do you have or what issues are of concern to you?
We are looking to make best use of our existing assets for a long term income, as I cannot work full time any more for health reasons. Diagnosed 5 years ago with a chronic medical condition. Working part time for employer and in receipt of income protection payments under company scheme. I get paid for the few hours I work (~10 hrs per week) and get pro rata income protection for the balance of hours (~30 hrs).

I am incapable of full time work anymore. My company is a pharmaceutical multinational so while my income is ok, job security is minimal. At some point, when they need to make savings, or there are major macroeconomic changes (who knows what will happen with the current US admistration :( ), it is possible I will be made redundant. I’ll get some kind of package if that happens, but hard to say what exactly. My spouse was a late entrant to public service so he is on a starting salary.

My concern is that we will need to live off what returns our current assets can generate, as neither of us will be earning a large enough salary to support the family without deriving some income from them (the assets, not the family!)

We had a rental property but sold it in the last few months as tenant had moved out and the rent we were making wasn’t huge (limited by rent controls to about half the market rate). We are not able for the hassle of being landlords.

We are fairly cautious financially. That being said we recognise that simply leaving cash on deposit will result in our losing money over time due to inflation, so wondering how we best proceed.
 
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I am sorry to hear of your ill health and hopefully cutting down on work can help.

Two key questions (that could potentially be added to the money makeover where people have children )
Are you paying or planning on paying private secondary schools for your children?
Can your children realistically commute from your home to a choice of 3rd level institutions?
 
Have you applied for invalidity pension?

Invalidity Pension

Invalidity Pension is a social insurance payment that may be paid to people who cannot work because of a long-term illness or disability.
www.citizensinformation.ie www.citizensinformation.ie
 
Errigal1983 said:
Annual gross income from employment or profession: 74000
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Errigal1983 said:
Company shares : 450k
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Errigal1983 said:
Managed fund: 75k
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Errigal1983 said:
Cash: 645k
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So, leaving aside your family home, you have €1.2m in cash, which is the equivalent of 17 years' income.

So you should not worry about whether you can continue working or not.

I would go further and say that your health is your absolute priority and let that dictate your work decisions. In other words, don't let your finances direct your work decisions.
 
Are you maxing your pension fund contributions? You should do so while you are still working and earning taxable income.

Your husband should max his to the extent that he gets 40% tax relief on them.
 
Another way of thinking about this is that you have €1.7m in investments apart from your family home.
You are earning €75k which is probably about €40k after tax. So working for a year increases your net wealth by about 2.5%.

So it won't materially impact your wealth if you retire early on health grounds.

A big rise or fall in the stock market would impact your wealth far more.
 
As Annie says, there should be good potential for salary increases for spouse with increments and possibly promotion. Without mortgage and childcare expenses would their increasing salary cover most of your day to day living expenses? Child benefit to be factored in as well. Savings could be used to top this up when needed and for education and larger one off expenses.
 
Something to think about - Is this health condition something that will get worse and could it affect your mobility. And if so, how suitable will your home be.
 
Your company has an income protection scheme, does this also kick in if you are unable to work at all? It may be worth exploring with HR and seeing what your options are. This may or may not protect you from redundancy. Companies would prefer of course if you resigned but if you had an income until retirement age it is worth exploring. As Brendan said your wealth is not improving much by you continuing to work.

You are very exposed to one stock with the company shares so sell and invest in a portfolio of shares. You have a managed fund so if you are happy with your advisor then get your savings and shares into the fund.

In terms of the long term management of your illness do you need to prioritise spending on health insurance, modifying your house for the future (accessible bedroom & bathroom downstairs) etc, doing the work now may be a great boon later.

If you do step back from working full time and your spouse is working can you still manage the household, childcare or will you need extra help? And for the kids can you begin to manage expectations around future financial assistance for them re university, or encourage them to get part time jobs (when age appropriate) to boost their own spending money. Plus focus on them assisting the household in simple chores, cooking, cleaning, washing. Most kids are very decent and do their best to assist.

Is your pension a DB scheme. It would be worthwhile exploring taking a transfer value if you think your life expectancy might be impacted by your chronic illness. In that way your family can inherit the residual value of the fund. And redo your will if it needs upgrading.

Best of luck managing your health condition. You and your spouse have great assets, no debts and you have good potential income streams for the future.
 
Clamball said:
Your company has an income protection scheme, does this also kick in if you are unable to work at all
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This should be explored as most income protection schemes pay anywhere between 65 to 75% of salary (includes social welfare benefit) and based on our tax system, net income maybe not be down that much.

Only thing to bear in mind, is the positive impact of working a couple of days a week from a mental health perspective and socialisation of work.
 
Can your children realistically commute from your home to a choice of 3rd level institutions?
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Possible to commute to 3rd level from where we are, but we probably need to modify the house to have a bit more living space if adult children are going to be sharing with us.
 
Have you applied for invalidity pension?
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I am on Partial Capacity Benefit, which allows me to work some hours and also claim this benefit. I was on Invalidity Pension when I was not working at all after for the first couple of years after my medical problems developed.
 
Errigal1983 said:
Number and age of children: 4. (2 teenagers, secondary school, two younger ones in primary). All are bright and academic, so likely all will go to 3rd level.
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Just on this, if they go directly from school to 3rd level then they should qualify for the Free Fees Initiative:

Third-level student fees and charges

Information on the Free Fees Iniative. Explains who doesn't have to pay third-level fees.
www.citizensinformation.ie www.citizensinformation.ie
And under the current SUSI rules, if the assessable income was less than c. €58K then they'd most likely also qualify for a grant covering the student contribution and possibly some level of maintenance grant:

SUSI Income

How does income affect my eligibility for a grant?
www.susi.ie www.susi.ie
Even with higher income some of the student contribution might be covered.

As I mentioned before, the SUSI grant scheme, as it stands, assesses only income and not wider means:

Plan to retire early- am I crazy

Add in 3rd level fees A bonkers (in my opinion - even if I/my son benefit from it) aspect of the SUSI grant system as it stands is that the financial assessment looks only at income (for the year prior to the academic year) and ignores other, potentially significant, means/assets - and even...
www.askaboutmoney.com
 
Sorry to hear about your issues

First things first, given you have sold a BTL property and are only working part time, get a tax advisor and ensure everything is up straight, with no issues and that you are claiming for everything health wise you can and that your Tax credits are being used effectively and that you have claimed for everything retrospectively. In effect, a full Tax review to ensure you have no issues.

Then review your income protection scheme, is it perpetual or for a fixed period?. Also, and sorry sorry to sound morbid but if you have a death in service entitlement, review that in your circumstances as well. Also review your companies redundancy scheme to see what you would be entitled to given you are on income protection and if that income protection ceases if they make you redundant.

Next, in terms of your home, is there any investments you need to make or should make now to future proof it given your circumstances.

Sell the shares and get Tax advice on what the impact is, you will probably have a liability but it is too much to hold in one company. Thing what happened the Anglo shareholders

Lastly, and in terms of pension, in the circumstances, can you take it early, especially if you get made redundant? At least get a quote and understand the numbers.

Ballpark, you will have €1m in liquid assets that you will have to invest. Bear in mind, putting a teenager through college if they have to live away from home is going to be approx €50k-€75k depending on the length of the course
 
Brendan Burgess said:
This is hugely risky to have almost have your accessible assets in one company. It doesn't matter how good the company is. Sell these shares assuming that you are not tied in.
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I always run into a mental block about this as I’m unsure whether to put that money into our existing managed fund, an index tracker of some kind, or a variety of shares (like top ten globally or in a given region). I think we may need to take professional advice about this from someone who isn’t selling an investment product.

I have a degiro account but am unsure whether it’s better to go with an established broker. I’m conscious that fees and charges can eat into returns and have read that managed funds don’t outperform passive index trackers but I’m new to that whole area.
 
Errigal1983 said:
I always run into a mental block about this as I’m unsure whether to put that money into our existing managed fund, an index tracker of some kind, or a variety of shares (like top ten globally or in a given region).
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I've also experienced such a blockage and procrastination. You should try to overcome it in an informed manner.

What to do with a million euros?

Personal details Your age: 49 Your spouse's age: 54 Number and age of children: 2 aged 9 and 14 Income and expenditure Annual gross income from employment or profession: €30,000 (state job) Annual gross income of spouse/partner: €60000 (state job) Pension: have maxed AVC’s (should I also...
www.askaboutmoney.com
 
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