You have €123k to invest + your wife's €60k.
It would seem to me that the best strategy for you is to maximise your pension contributions. Definitely use up the full 40% tax rate.
Then when you need funds for education in 7 years, you can take it out of your ARF.
Put in €1,000 now.
Cost to you €600.
Take out 25% tax free: €250
- 40% tax on the €750 remaining = €450
Total €700
And if your tax rate in retirement is only 20% , this increases to €850.
Brendan
It doesn't work that way Brendan. He has to maximise the contributions into the public service pension first. The lump sum payment is part of his service. He may be able to get a higher amount under Revenue rules if his salary is higher than the pensionable income.
After he has maximised his contributions into the public service pension, he can contribute to a personal pension/ PRSA for his private income. He can get 25% of those contributions as a lump sum.
The taking future education expenses from the ARF works if paying tax at the lower rate. If at the higher rate it doesn't as he is paying tax on the full amount taken out. With an investment policy, he pays the tax on the gain but not the capital.
I agree 100% to maintain the whole of life. With such a big age difference between the two of you, this needs to be factored in with any financial planning.
The ARF is your best route for your AVC's...after you see if you are able to increase your lump sum payment and pay it out of your AVC's. The ARF will pass to an ARF in your wife's name on death.
Get the money out of Prize Bonds. They aren't doing anything for you and you are relying on luck to get a return from the money. Not a good strategy.
Planning ahead for future expenses is good planning. But having all of your money in State Savings is not the correct thing to do, especially when inflation is so high. You need to give your money an opportunity to grow. Get it invested and working for you.
Steven
http://www.bluewatefp.ie (www.bluewatefp.ie)