Early 50s, what to do next?

I also think 10 yrs expenses in cash is extreme but open to persuasion.

Gut feeling is 5 is prudent.
 
Going back to the OP’s conundrum, they are mortgage-clear, maxing out AVC’s, and sitting on 170k cash on deposit, with a desire to retire in 10 years at age 62.

I would consider pre-loading some AVC’s to get tax-free compounding going asap (unless buying a basket portfolio of stocks is your thing) and claim tax back in future years. The main benefit will be getting a fund/ETF-like experience without the deemed disposal nonsense that goes with it, although you will lose flexibility of having a wedge of accessible capital until you draw down your TFLS and/or restock cash pile from future tax rebates/not paying AVC’s from salary.

Marginal enough tax benefit though compared to just paying max AVC’s from salary.
 
ArthurMcB said:
I also think 10 yrs expenses in cash is extreme but open to persuasion.

Gut feeling is 5 is prudent.
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Well, let’s say you retire at 65 with a portfolio equivalent to 25 years of expected expenses, net of the State pension.

If you hold 10 years of expenses in cash/bonds that gives you a classic 60/40 portfolio.

Now, you may take the view that a 60/40 portfolio is too conservative for a 65 year old (I wouldn’t) but it’s certainly not an “extreme” asset allocation.

Incidentally, if I had a portfolio equivalent to 40x expected annual expenses, I would still hold 10 years of expenses in cash/bonds, rather than a percentage allocation to low-volatility assets.

Why 10 years? The experience of stock market returns during first decade of this century. 5 years in cash just wouldn’t have cut it.

And that was far from the worst decade in stock market history….
 
If retiring at 65 thwn it makes sense to me. Id say instead of 60:40, as you say, maybe 30:70 would ve better...at that age.

If retiring at 55 theres no way i want that allocation, too conservative. Happy with 5 yrs in cash...at that age.

Its dependant on retire age.
 
EarlyRetirementNow article on equity glide paths

A very worthwhile read. We’re somewhat conditioned to think you must go conservative in the run-up to retirement and leave it like that. Historically though (for US retirees, at least), gradually re-allocating to a more aggressive equity stance over the first ten years of retirement has been more successful - where success equals not running out of money in retirement.
 
Sarenco said:
net of the State pension.
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The state pension will be €15k in 2025. It’s the majority or a large minority of most retirees’ cash income in Ireland. It serves a large layer of free insurance.

And if the state pension is likely to only form a small part of your expected retirement income then you’re probably rich enough to stay fully in equities!

I’ve known people in their 80s and their spending generally falls away naturally too.

The only kind of person I’d advise to have ten years’ expected expenses in cash is someone planning to never work after their early- to mid-50s and with obligations such as kids to put through third level.

But for the typical pension saver I think it’s overcautious.
 
conor_mc said:
I would consider pre-loading some AVC’s to get tax-free compounding going asap (unless buying a basket portfolio of stocks is your thing) and claim tax back in future years.
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Thank you. That's something I was thinking about but I wasn't sure it was a good idea. I think that's it's a good option for some of the funds anyway.
In the last couple of years, my wife also put a lump sum in a PRSA to avail of her tax advantage. She put money in to cover 2022, 2023 and 2024. However as she pays 20 per cent tax, I am not sure this is the most efficient. Basically, a small lump sum was put there because it was simple.
 
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Arewetheryet said:
Thank you. That's something I was thinking about but I wasn't sure it was a good idea. I think that's it's a good option for some of the funds anyway.
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Is it though? The general advice is usually to max pension contributions up to one's age related tax relief limit assuming that you're paying high rate tax on the lot. But not if you're only paying lower rate tax. In which case making contributions that don't benefit from any tax relief on the way in and are not guaranteed to do so at a later date doesn't seem prudent. But maybe there are circumstances in such these rules of thumb should be bent...?
 
Maybe SRCOPs and credit can be moved between spouses to maximise tax relief.
 
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