7 year Semi Retirement plan

Sure, all feedback is interesting.

As follows with the Uni costs being the only estimate, everything else is actual (as at today)

Monthly - €4665 (€56k) - €5290 (€64k) depending on 1 or 2 at Uni the same time
1700 - household expenditure (food/petrol/school exp/clothing etc)
1090 - mortgage
1000 - living fund
250 - utilities (gas/electric/phones)
625 per child at Uni
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50

If you retire at 50 and your gross income is less than 50k you wont have to pay college fees. When you have more than one child at college the income levels increase by roughly 4k for each of them.

Cavanbhoy said:

If you retire at 50 and your gross income is less than 50k you wont have to pay college fees. When you have more than one child at college the income levels increase by roughly 4k for each of them.

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This is has been something bubbling in the back of my mind, that if I have enough pension funding and savings, it seems SUSI grant eligibility is based on income so would hope my kids would have fees covered. Looking at the current application it doesn;t seem to ask for savings?

Ndiddy said:

This is has been something bubbling in the back of my mind, that if I have enough pension funding and savings, it seems SUSI grant eligibility is based on income so would hope my kids would have fees covered. Looking at the current application it doesn;t seem to ask for savings?

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my recollection from a year ago is that it was very throrough on savings with lots of detail eg on state savings and more sophisticated allowing for actual income on savings than social welfare means testing treatment of capital.

mtk said:

my recollection from a year ago is that it was very throrough on savings with lots of detail eg on state savings and more sophisticated allowing for actual income on savings than social welfare means testing treatment of capital.

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So would my understanding be right that it counts the income derived from savings but does not ding you for the actual savings amount?

I suppose I could also possibly work it that when we are 50 ( which for us will be a couple years before university going kids), we use some DC pension lump sum money to pay off mortgage, then we would have relatively low "income" from ARF and qualify for fee and maintenance grants?

based on the SUSI website and their grant Reckoner calc, it purely looks at income recd.

+ this table goes into more detail of the grant - seems you can earn up to 39,875k for the student to still be eligible to receive full 100% maintenance grant + tuition fees

[broken link removed]

Ndiddy said:

So would my understanding be right that it counts the income derived from savings but does not ding you for the actual savings amount?


m

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mainly correct but the guide is 33 pages long !
It looks like it takes into account a proportion of inheritances,
capital gains and
redundancy payments ( e.g. see page 23 of the guide) and
pension lump sums ( less clear!)......
It appears to be trying to be very sophisticated and more complicated than a tax return?!

Biennial Update - Age 48. 2 years to target.

Has been an interesting few years, with inflation and market impacts.

Summary as at Jan 2023:

• Income combined Net €6k p.m.
  • Income 1: Up to €115k (moderate increase in base salary + bonus)
  • Income 2: up to €15k - part time role
• Pension1: c€700k
• Pension2: c€260k
• Mortgage: Now €126k
• Expenditure: nothing non standard
• Savings & investments: €40k

2023 - 2025:

• Pension: continue to max inc1 contributions / Inc 2 small 6% contribution (for employer match) =€42k p.a.
• State pension U.K. - continue paying annually stamps - £150 p.a.
• Mortgage: 10 years left
• Income: Mrs, Not much scope for improvements as she only works 15 hrs a week (~15k pa)
• Income: Mine, expect small annual increments around 3% - €115k-€125k
• Expenditure: No major expenditure planned, Monthly Exp - Mortg\Food\living exp\bill\lifestyle = 5.6k
• Savings & investments: Only small savings added outside of pension wrapper, will mostly spend any disposable inc.

At 50
Combined pension est: €1.1m (€42k p.a contr plus 5% growth)
Mortgage: €90k
Savings: €50k
Kids starting college @now, +2, +6 yrs

Future estimate

Annual Expense age: 50-59 - €58k-€68k (cost of living+college fees)
Annual Expense age: 60+ - €50k-€55k (cost of living)
State pensions at 66/67/68(?): €12k Ireland + €10k U.K. Spouse €12k Ireland.

Target update: Still focussed on main review at 50 as planned and take stock.
Option A - Continue working full time beyond 50 until age 52-55. (Until Pension is sufficient for expenses)
Option B - Leave at 50 as planned and take up a hobby/part time role for supplemental income and to occupy time until 60

50+O

I had planned on updated this later in the year, but Cervelo's 20 year expense post inspired me to stick my 50 year forecast up..

So Sept 2025 marks 7 years since I first posted this, so as I approach the point at which I have worked optimistically towards. Things are well on track. largely thanks to higher than expected market returns. Overtime the awareness/clarity I have got over my actual expenses has greatly been of benefit for the below forecast.

I am over the next few months starting the ball rolling:

• Drawdown my pension (€1m) and pay off the remaining mortgage with TFA
  • Drawdown Wifes prsa when she is 60 (currently 350k)
• Resign - Pulling the trigger by end March tentatively, or maybe i'll coast along for a while longer.
• Post resigning, I will then find some part time/casual work/volunteer for structure and mental stimulation

For reference below is my forecast spreadsheet (which I have tinkered and adapted with what seems like an infinite number of different variables), in the main I believe I overestimate on my future expenses and am cautious on market returns so am confident in the real life execution. That said I am looking forward to any questions and challenges/suggestions/feedback from the esteemed users here from their experiences to see if it changes my views..

Assumptions:
Pension return next 5 years = 2%
Pension return thereafter = 3%
Inflation = 2% (starting on expenses from 60 years on, as before this we will have income which should offset)
Savings Interest = 1%
Effective rate of Tax will gradually reduce on the similar drawdown levels thanks to inflation.
I will use a guard rail approach and reduce down my Income in any negative years.

Wow, lots to digest here and will require a lot of rereading and even then I'm not sure I find much wrong if anything at all
You're in a totally different situation to me, more to play with but with an extra 3 mouths to feed and clothe etc etc
But the one area that I do see that I won't say concerns me as I feel you probably got it covered but I think would be prudent to review
And that is all your calculations for the ARF return as far as I can see are in the positive which from my personal experience is not always the case

In '15 I invested a good chunk of our pot with our FA's investment 50/50 balanced portfolio which although at the time was not an ARF it was for all intents the same, at the time of set up the indicated return was going to be an easy peasy 4% net if not more
The first 4 months return was better then expected but the next 4 saw a 20% drop and from then on it grew and fell but never really recovered
and continued that way for the next 4 years and at every yearly advisor meeting the only advise we got was "stick with it, it will come good"
When we did pull it we got back our original investment, thank God, plus 4% but really that was a net 2% as there was a set up charge at the beginning that we paid separately

Now before anybody jumps on me I'm not for one second criticizing the FA in any shape or form, they gave solid advise and it was a good investment made up of 5 ETF's in a 50/50 balanced portfolio but it just didn't preform as expected, on hind sight, we probably were a little conservative in our attitude to risk back then
If it was today I'd be upping the risk to a 90/10 as my tolerance for risk is greater and maybe if we'd taken that approach back then it might have preformed better

So the question I would ask myself is what would happen if I had a series of yearly negative growth on the ARF or just no growth at all??
Or have you stress tested your plan for any unforeseen events and what are the contingencies ??

Agree with @Cervelo, I didn’t get an opportunity yesterday to reply but the one thing that stood out to me was Sequence of Return Risk.

Best education I’ve had on this has been EarlyRetirementNow’s equity glidepath posts, which would suggest mitigating a series of poor results early in retirement with a conservative equity:bond ratio, but moving back to higher equity proportion over 10 or so years in order to ensure your portfolio has sufficient growth potential for your latter years.

Check out his google sheet data, particularly focusing on late 1968 retiree cohort - it’s very enlightening about the risk of using average gain figures in your retirement planning, even conservative ones.

May I ask why the state pensions stay unchanged in your table from age 77 onwards ?

A few things to note:

The table is a bit unwieldy to be fair. There's a lot in it and it's particularly confusing that you flip between monthly/yearly in the one table. You really only need yearly net income and expenditure and the budgeting should be a separate table. I think this is why you haven't got many replies yet

Your net income for 2025 is wrong. It should be about €1.5k higher. Maybe you used a 2024 calculator that does not account for the budget changes? And then I presume each year thereafter should also be higher

Your expenditure is very high for the next 10 years and I don't think it can be supported by an ARF of that size. You really are at risk of sequence of returns. One bad year early on and the whole thing collapses. This is compounded further by the need to use so much of the TFLS to clear your mortgage

Only you will know the details but the budgeting is also confusing. Why do 'bills' jump so much in 2025, back down in '27 and up again a few years later?? The uni column is low but maybe you are only capturing fees here.

Have you thought about asking for redundancy rater than just resigning? It could be an additional lump sum that you were not expecting

How sure are you that your spouse will continue working till 60? Your plan kind of relies on it. Seeing you retire early might make them reconsider in the next year or two. If that happens then I don't think you have the funds to support your planned expenditure.

_OkGo_ said:

How sure are you that your spouse will continue working till 60? Your plan kind of relies on it

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This is critical as to why you need illness cover, I had expected to do similar but sadly life tripped me up. I got to 56 and boom, I was finished in the workforce.

For a while I lived in a grey zone where I had no expectation of anything, my only regret was my wife didn't know where money was stashed nor how to pull levers nor even addresses of rental properties. She was completely in the blind.

Thankfully I pulled through.

I'm very lucky though, I worked for a terrific company who did everything they could to support.

Key learnings

Make a will

Establish power of attorney ( I was in middle of it but fell foul of new regs and Solicitor threw her hat at it)

Ensure your partner knows everything, accou ts passwords, investments, pensions. How to manage residential lettings, who tenants are how to manage RTB etc.

Funnily enough what caused me the greatest immediate distress was my car that was parked in a hospital car park. My wife refused to learn to drive it because it was too big a motor and it was going to be clamped, thre I was needing emergency surgery worried about clamps.

Both parties in a relationship need to know everything from driving your car to understanding the ABC of how you have both built the bricks of yiur finances....laizze faire doesn't cut it.

Hi Cervelo and Conor_Mc

Yes agreed on sequence of returns and my understanding of this has developed over time from these forums. I have run an analysis of the fund using historical vanguard 60/40 returns (Where the starting 2 years are negative for most impact). Using influence from the the guardrail strategy by Guyton-Klinger, I adjust down my drawdown following any negative year by €15k and the fund survives.

That said, if there is a longer or deeper sequence of bad returns it would bomb and i'd be in trouble. My view here is I still have earning capability and can go back to a higher paying role.

The expenses have edits up or down based on events e.g. Paying for things directly post work, (healthcare, phones), Uni, 5 gradually becoming 2. I tend to eer on the side of caution with the gains, and be more pessimistic with anticipated costs. As mentioned on Cervelo's expense thread, I reduce the expected food/groceries from €1100pm for 5 mouths down to €800pm for 2, whereas the actual examples shows it closer to €500pm. So the base costs have a good buffer if needed to cut back beyond the flex spend (ad hoc and hols) that are easily reduced.

Thanks also Conor for the glidepath link, i'll have a proper review of that later, I had seen reference to this gradual increase in equity % mentioned elsewhere recently, and it does align with my thoughts of next 5 years vs the following 45 years.

Okgo, obviously the spreadsheet looks better with formatting and column grouping means the monthly figures are hidden, but that aside, its not too difficult to follow and I thought it important to show the breakout, its just unwieldly in a post and hopefully its of benefit to others who want to get into the details.

50+O

50andOut said:

Thanks also Conor for the glidepath link, i'll have a proper review of that later, I had seen reference to this gradual increase in equity % mentioned elsewhere recently, and it does align with my thoughts of next 5 years vs the following 45 years.

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You’re welcome, and because you mentioned Guyton-Klinger and flexibility like going back to work if needed, there’s more where that came from!

ERN Guyton-Klinger thoughts

ERN also cautions against myths around post-retirement flexibility

As you can probably tell, I really dived into this ERN rabbit-hole over the summer last year and found it super informative and interesting.

conor_mc said:

As you can probably tell, I really dived into this ERN rabbit-hole over the summer last year and found it super informative and interesting.

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Thanks for the pointer Conor, I can see myself falling down this rabbit hole of a website many times over the coming year

Cervelo said:

Thanks for the pointer Conor, I can see myself falling down this rabbit hole of a website many times over the coming year

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It was like a good book (60+ posts!), I genuinely enjoyed reading it all on holiday last year. You hear/read a lot of bull and bluster online but Karsten is exactly what you’d expect from a German who worked at the Federal Reserve. There’s actually a somewhat comical podcast with him and some American YouTuber hype dude talking about options trading…. you can almost hear his eyes rolling on it!