Early 40s pension and savings/ advice

Hi All

Personal details

Age:42
Spouse’s/Partner's age: girlfriend, cohabiting 2 years

Number and age of children: 0

Income and expenditure
Annual gross income from employment or profession: 70k
Annual gross income of spouse: n/a

Monthly take-home pay 3.5k

Type of employment: e.g. Civil Servant, only 1 years service. New to public service, previously MNCs

In general are you: saving

Summary of Assets and Liabilities
Family home worth €400k with no mortgage
Cash of €10k

No loans

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

Other savings and investments:
10 k rainy day savings

Do you have a pension scheme?

Defined Contribution pension fund: €210k current value. Left company so this is its current value, (Passive Global Equity Unhedged, performance has been 8.3% over the last 7 years, last year -13%, highly global equities, 60% North America) and a PRSA 50k (Dynamic Pension & Invest). currently contributing €750 a month to this.
Also DB €5.8k current value from previous scheme, capped at a max of 3% growth a year based on cpi
Joined the Spss scheme last leat also. Very little in this. No statement yet.

Do you own any investment or other property?
Zurich investments. (140k value, 130k after tax, 120k contributioned. Investing in Dynamic Pension & Invest).

Other information which might be relevant

What specific question do you have or what issues are of concern to you?
I have good pension values currently however, I am not sure what it will be worth in the future to me in real terms. Could I retire at 60, 62 or 65 and what would I have. Any estimates would be greatly appreciated. if this keeps growing will I be liable for tax? so should I not be contributing anymore to my PRSA? any advice on what I should do to diversify future savings and have a good return?

Mikefromcork said:

Spouse’s/Partner's age: girlfriend, cohabiting 2 years


Annual gross income from employment or profession: 70k
Annual gross income of spouse: n/a

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Does this mean that you are the sole earner and your girlfriend is not earning anything?

Type of employment: e.g. Civil Servant, only 1 years service. New to public service, previously MNCs

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What does "MNCs" mean?

Cash of €10k
...
Other savings and investments:
10 k rainy day savings

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Is that €10k or €20k in total?

Do you own any investment or other property?
Zurich investments. (140k value, 130k after tax, 120k contributioned. Investing in Dynamic Pension & Invest).

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This is confusing.
Earlier you said that you had €10k cash plus (?) €10k "rainy day" fund only?

MNC = multi-national company

@Mikefromcork
PS pension schemes don't issue statements, as there is no fund.

Unless the SPSPS issues them? But I would have heard about it if it does. So I suspect it doesn't.

Mikefromcork said:

Age:42
Spouse’s/Partner's age: girlfriend, cohabiting 2 years

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Do you and your girlfriend operate separate finances? Or does she have no income or assets?

This is important to better understand your situation.

Protocol said:

PS pension schemes don't issue statements, as there is no fund.

Unless the SPSPS issues them? But I would have heard about it if it does. So I suspect it doesn't.

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Pension administrators are obliged to provide annual statements to SPSPS members by June 30th of the subsequent calendar year. It summarises pension benefits accrued to date (including CPI adjustment of benefits accrued in prior years), but unsurprisingly doesn't give a € value of the unfunded pot. If you are brave or foolish, you can try to value the expected future cashflows yourself. See the thread below for more detail.

Thank you, I didn't know about this.

So thousands of statements are issued each year. Interesting.

ClubMan said:

Does this mean that you are the sole earner and your girlfriend is not earning anything?

What does "MNCs" mean?

Is that €10k or €20k in total?

This is confusing.
Earlier you said that you had €10k cash plus (?) €10k "rainy day" fund only?

Click to expand...

My girlfriend has her own income and I am not including this as part of the exercise.
MNC multi National corporation
Total of 10k in savings in an instant access account. Earning no interest.
The Zürich investments need to have tax paid in them. If I cashed them in tomorrow I would have 130k and I invested 120k and their value is 140 on the market.

Hi Mike,

By my count, you have net wealth of €800k+ at age 42. Your girlfriend has their own income and possibly some assets to hand or to inherit. Looking solely at your income and assets, you are very well off for someone your age. My guess is that you received a substantial gift or inheritance. If you work for 15-20 years in the public sector at your salary level, then you'll have another healthy tax-free lump sum at retirement and a further pension income stream. You will likely be able to retire early once your other investments don't collapse in value.

Your private pension assets should be free of CGT and further contributions will still provide income tax relief. When you draw down money from these pensions in retirement, you will in general have to pay income tax. Importantly, there is also a limit to how much of a pension fund you can build up and receive income tax relief on. Search for information on the "Standard Fund Threshold" (SFT) on this site and elsewhere online.

As mentioned above, you should expect to receive an annual pension statement sometime before June 30th that will lay out the defined pension benefits you have accrued so far under the SPSPS. If you want to continue investing part of your income and are happy to keep the money locked up until you retire, then you could do worse than investing in an AVC-PRSA. Again, bearing in mind the SFT.

Nobody can tell you how financial markets will move in the next 20 years with any certainty, so you will have to accept the odds on offer today and consider how much risk you are personally prepared to take with your capital. A lot of people will tell you that average annual returns on equities are good and are expected to will keep up with inflation and then some. But there are no guarantees. Only risk and reward.

NoRegretsCoyote said:

Do you and your girlfriend operate separate finances? Or does she have no income or assets?

This is important to better understand your situation.

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Yes completely separate and she has a job. Her analysis might be for another day.

Mikefromcork said:

Yes completely separate and she has a job.

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If you are in your 40s and you cohabit with someone then it's probably wise to look at them together rather than in isolation.

Otherwise @noelÓm 's advice is very good. Otherwise I think your wealth would be better in AVCs than in Zurich investment products. The former gets a much easier tax treatment but of course is not available until retirement.

Overall with no dependents and mortgage paid off and if you live a prudent lifestyle you will have no difficulty retiring at 60 with your current level of wealth and pension trajectory.