Doing ok but wish to semi-retire at 65. Is this possible?

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under_over

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Age: 49
Spouse’s/Partner's age: 48

Annual gross income from employment or profession: €80,000

Annual gross income of spouse: €35,000 (Working 3 days a week)

Monthly take-home pay approximately €5,500

Type of employment: My Wife is private sector and I joined the Public sector in May 2023.

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

Rough estimate of value of home: €300,000

Amount outstanding on your mortgage: €12,000 - Will be finished in Dec 2025

What interest rate are you paying? BOI tracker 0.9%

Mortgage repayments are €1070.00 per month.

Other borrowings – car loans/personal loans etc:
Car Loan of €7000
No other loans

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

Savings and investments: €15,000 savings as rainy day fund

Do you have a pension scheme? Yes, I am on the Single Public Service Pension Scheme and my wife is in a DC scheme through work.
I took a private pension from my previous employment which is in a buy out bond of approximately €260,000
My wife contributes 180 pm which is matched by her employer plus 180 AVC p\m. Fund value €85,000
I pay an additional 5% of my income into an AVC on top of the Public Sector pension

Do you own any investment or other property? No

Ages of children: 15, 12

Life insurance: Just mortgage protection

What specific question do you have or what issues are of concern to you? I think we are doing ok but I would like to semi-retire at 65 if possible and maybe work part time. We are also looking to do some home renovations in the new 2 years which will cost about 50K and am wondering how to do this and still try to semi-retire at 65.
 
under_over said:
Age: 49
Spouse’s/Partner's age: 48

Annual gross income from employment or profession: €80,000

Annual gross income of spouse: €35,000 (Working 3 days a week)

Monthly take-home pay approximately €5,500
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Are you sure that this is correct?
Even allowing for your wife's pension contributions your jointly assessed monthly net should be more like €7K by my calculations.


under_over said:
Other borrowings – car loans/personal loans etc:
Car Loan of €7000
No other loans

Savings and investments: €15,000 savings as rainy day fund
Click to expand...
What rate is the car loan?
Almost certainly it would make more sense to clear it using €7K from your "rainy day" fund and then build the latter back up if you really think that you need such a large amount readily available.
Otherwise you're effectively borrowing at car loan rates to have €7K readily available (at deposit rates?).
 
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What are your monthly outgoings? Do you and your spouse have a good idea of this currently? In 12 months you will no longer be paying a mortgage and your largest bill will drop off. At 6.5-7K pm income how are you currently using it all up and (saving where you can)?

Once you have a good handle on this, you should at least have the €13K pa that you were using to pay off your mortgage to fund your home improvements. Check with your bank on the cheapest way of funding this, perhaps another small mortgage on the house which might be easier to get while you currently have a mortgage, just check with your bank. But with a repayment capacity of ~€1K pm you should have the €50K paid off in 5 years.

By then you will be 55 but more crucially the kids will be 21 & 18 and you will be in the middle of college going if that is the path they want to take. Will they need to live away from home for college? If you could pay off the home improvement loan before college then you should be able to fund that too. Perhaps your spouse might have moved to full time by then also.

So your ability to fund your pension plans needs to come from your day to day spending - don’t count on the savings from the mortgage to fund it as that will be tied up with the home improvements and college kids for the next decade.
 
ClubMan said:
Are you sure that this is correct?
Even allowing for your wife's pension contributions your jointly assessed monthly net should be more like €7K by my calculations.



What rate is the car loan?
Almost certainly it would make more sense to clear it using €7K from your "rainy day" fund and then build the latter back up if you really think that you need such a large amount readily available.
Otherwise you're effectively borrowing at car loan rates to have €7K readily available (at deposit rates?).
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My Net take home is about 1900 fortnightly after tax and deductions such as the AVC. I will double check what my wife's currently is.

I had considered paying off the car loan but unfortunately I took this out through he garage as a HP loan and there is minimal savings by paying off early.
 
Clamball said:
What are your monthly outgoings? Do you and your spouse have a good idea of this currently? In 12 months you will no longer be paying a mortgage and your largest bill will drop off. At 6.5-7K pm income how are you currently using it all up and (saving where you can)?

Once you have a good handle on this, you should at least have the €13K pa that you were using to pay off your mortgage to fund your home improvements. Check with your bank on the cheapest way of funding this, perhaps another small mortgage on the house which might be easier to get while you currently have a mortgage, just check with your bank. But with a repayment capacity of ~€1K pm you should have the €50K paid off in 5 years.

By then you will be 55 but more crucially the kids will be 21 & 18 and you will be in the middle of college going if that is the path they want to take. Will they need to live away from home for college? If you could pay off the home improvement loan before college then you should be able to fund that too. Perhaps your spouse might have moved to full time by then also.

So your ability to fund your pension plans needs to come from your day to day spending - don’t count on the savings from the mortgage to fund it as that will be tied up with the home improvements and college kids for the next decade.
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Yes, college is on the horizon and getting closer so am hoping the mortgage outgoing will help support this. I do keep a high level monthly budget of big outgoings but may need to do a more detailed one for a few months to understand where we are spending.

For the home improvements one option is to cash in a portion of the buy out bond as I believe I can access 20% at 50 but i know this will reduce the long term benefits of it.
 
ClubMan said:
I don't understand this.
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I checked with the HP company and there is a saving of about 400 euros by paying off early so doing this now. Maybe I should have gone to my local CU and paying off early would be more beneficial to me. I had compared interest rates when buying the car which seemed consistent across loan providers but I think the HP compound interest was not a good choice. A lesson learned.

I also double checked my wife's net monthly take home and this is 2300. Our combined net take home is approximately 6000.
 
Your net combined income is €6400 (1900 every fortnight gives you an income of more than 4100 per month) as well as 280 for child benefit so close to €6700. This is important to know if you want to take charge of your finances.
 
So I think you need to understand in a little more depth your current spending, so that you can make definite saving plans. If you assume roughly that the household monthly income is €6000 but it is €6700 could you challenge the family to save that €700 a month into savings?

That would mean in terms of short term savings you would have by the end of 2025 €8400 extra in savings and by the end of 2026 €29800 saved for the home improvements.

Perhaps have a family meeting; list out all the income and expenditure and agree on short, medium & long term financial goals - probably home improvements - college - retirement AVCs in that order.

You sound like you have great saving potential, all you need is a plan of action, and family agreement.
 
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