Building House & Planning For Retirement

fastfullback

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Age: 39
Spouse’s/Partner's age: 35

Annual gross income from employment or profession: €112K and bonus upto €25K

Annual gross income of spouse: €25k {3 day a week}

Monthly take-home pay €5300 on my salary

Type of employment: e.g. Civil Servant, self-employed Both Private Sector

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


Saving €1500 a month
Mortgage €860 a month
Groceries €700 a month
Childcare €600 a month

Rough estimate of value of home €320K
Amount outstanding on your mortgage: €173K
What interest rate are you paying? 2.95%
Selling this house at the moment. Hope to be done by May and then add around €140K in equity towards new house build in 2022. We'll rent in the interim.

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

Savings and investments: 70K Cash , 28K company stocks (gross)

Do you have a pension scheme? Yes. Current value is €126K and I'm paying in 10% and company matching 7%. Also did a one off AVC this year of €6K from bonus.
Wife's pension is small around €15K

Do you own any investment or other property? N/A

Ages of children: 3 year old and 4 month old.

Life insurance: Yes, Life Insurance and serious illness. Also good cover by work


What specific question do you have or what issues are of concern to you?
I'm planning to build in 2022, probably going to be at least €450K all in for the build so mortgage of at least €250K. My plan is to take this out for a long ish term {25 years} at a low fixed term rate {around 2%} and then use excess salary to max out pension as #1 priority and any excess can then be used to overpay mortgage. This may mean I have to use some of my pension lump sum to pay off mortgage but that seems like a good strategy to me
Does this sound like a good plan?

I've been reluctant to max out pension the last year or 2 as I wanted the cash in the short term for the house, but I'm now thinking I should just max it out and take a higher mortgage amount if needed. I already have alot of cash on hand so I think this makes sense.

Good plan?

I'm lucky to be earning a good salary so if I max my pension contributions I'll be able to pay in €35K a year. €115K {revenue limit} x 25% {I'm 40 this year} plus €7K company contribution.
If I can keep this up for next 15-20 years I should build a significant pot. Currently invested 100% in equity which I'll do for in at least for the next 10-15 years.

Good overall pension strategy?
 
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I think it's a reasonable strategy to contribute the max possible to your pension, and then overpay the mortgage with additional. Time in market brings returns, and once the year has passed you can't get the valuable relief.

You can max out last year before October 31. So whenever you start make sure you do the previous year. Or maybe do the previous year this year anyway?

The regular advice here is to get your mortgage under control before paying pension. You would be at 2 x LTI, and approaching 50% LTV for the new house (assuming you use all your savings)

If I was in your shoes I might wait til the house costs are clearer, and mortgage rate is known, before locking away the funds in pension.

You are on a large wage. How secure are your earnings? What does future earnings look like?
 
Last edited:
I think it's a reasonable strategy to contribute the max possible to your pension, and then overpay the mortgage with additional. Time in market brings returns, and once the year has passed you can't get the valuable relief.

You can max out last year before October 31. So whenever you start make sure you do the previous year. Or maybe do the previous year this year anyway?

The regular advice here is to get your mortgage under control before paying pension. You would be at 2 x LTI, and approaching 50% LTV for the new house (assuming you use all your savings)

If I was in your shoes I might wait til the house costs are clearer, and mortgage rate is known, before locking away the funds in pension.

You are on a large wage. How secure are your earnings? What does future earnings look like?
Thanks for the feedback and advise.

Good point on knowing building costs. I should have a QS price the build in the next 2-3 months so I can decide then weather to top up my 2020 pension contributions.

Ya my earnings are pretty secure and good future earnings outlook although I'm not sure how much more increases are possible. In working in data and analytics industry for large multinational so really great industry at the moment.
 
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