As a matter of interest €1.6m seems a large ARF to have accumulated out of €40k salary. $20k per annum over 30 years would be doing well to accumulate €1.6m. What is your secret
Im going to guess that the OPs salary was higher than 40k in the past.
Case study Have I enough to retire now ?
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Im going to guess that the OPs salary was higher than 40k in the past.
Duke of Marmalade
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It says the IQA is means tested. I am not sure OP would get the IQA. Incidentally if you allow for the Christmas bonus the OAP is just over €13k p.a.
Further digging reveals that the means test for a couple is based on a joint assessment of income and assets so it seems that OP will not be entitled to an IQA.
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Brendan Burgess
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Hi Duke
That's very interesting. Thanks.
It makes sense.
Brendan
That's very interesting. Thanks.
It makes sense.
Brendan
thunderin_eejit
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1.25m in an ARF sounds a bit too low to meet those requirements. Taking 4% withdrawal, minus 1% for the crazy fees we pay in this country, leaves you with 37.5k p.a. pre-tax. With that amount I'd personally aim for €30k p.a. from the ARF to be slightly safer, there or thereabouts, and I'd expect to receive at least something from the OAP when the time comes.
If yourself or your spouse were able to get a job that you enjoyed, even if it didn't pay hugely well, that would go a long way to closing the gap.
I think the big problem in this scenario is that the OP's (non-earning) wife is only 45.
If the OP was to buy an annuity with the €1.25m, with a 50% reversion to his wife, rising in line with inflation (capped at 2%), it would only produce an income of roughly €18,500pa.
If I was in the OP's shoes, I would wait until all debts are cleared and the kids are self-sufficient before even thinking about retirement.
€1.25m is obviously a huge sum but I don't think it's sufficient to fund the OP's desired lifestyle with any degree of certainty.
If the OP was to buy an annuity with the €1.25m, with a 50% reversion to his wife, rising in line with inflation (capped at 2%), it would only produce an income of roughly €18,500pa.
If I was in the OP's shoes, I would wait until all debts are cleared and the kids are self-sufficient before even thinking about retirement.
€1.25m is obviously a huge sum but I don't think it's sufficient to fund the OP's desired lifestyle with any degree of certainty.
If you had retired in 2000 and withdrew €40k every year from a €1m portfolio (60% in global equities and 40% in global bonds hedged to euro, rebalanced quarterly) you would only have €63,600 today.
And that ignores inflation, investment costs and taxes.
Brendan Burgess
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Folks, I have deleted posts which argue over whether the Contributory OAP will be means tested or not.
Feel free to start a new thread on this topic, but it's distracting to this interesting thread.
Brendan
Feel free to start a new thread on this topic, but it's distracting to this interesting thread.
Brendan
Lucius Lamb
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So this ARF would "bomb out" after little more than 20 years even though there was a bull market in equities and bonds for much of the investment term? What went wrong? Sequence of returns losses in the early years caused by dotcom crash?
cars €350, mortgage €380 Gordon. Cars paid off this morning on your good advice.
time to plan
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In absolute terms, you would have withdrawn 21 x 40k = 840k. How is it ending up worse that holding 100% in cash at 0% interest and being left with 160k? Ignoring the factors you mention of course.
hello noRegretsCoyote. Both of us fully subscribed and entitled to full state pension based . Checked with Revenue this morning. plenty contributions. Sorry for delayed replies lads. was having technical issues posting.
ArthurMcB , yes spot on, my self employed salary much higher back in the boom years , early noughties when the main contributions were made. Sorry for delayed reply. Technical issues on my side.
Thanks thunderin-eejit. Can you explain to me how did you calculate that figure. Are you saying a 4% withdrawal is only in effect a 3% withdrawal €37,500 as opposed to €50,000 but you pay PAYE , USC and PRSI on the whole €50k ? Thank you.
Duke of Marmalade
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@marsaday Just a sort of non financial observation. My basic philosophy is that you can never have too much lullah. Possibly too much for my own and the duchess' needs. But you have children (22 and 18). These days the young have it tough - would you not like to help them out and after them your grandchildren etc.?
Duke of Marmalade
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Yes indeed. A question of priorities. He is putting his own selfish needs ahead of his kids. Only joking @marsaday
Gordon Gekko
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There is sense in what the Duke is saying though.
If someone has an ability to make money and he or she has kids, there is an argument for ‘making hay while the sun shines’.
Yes, there is the counterargument about not owing anyone else a living and getting out of the rat-race.
But, speaking as a parent, I’d happily work a few extra years if it meant safeguarding my children’s future.
If someone has an ability to make money and he or she has kids, there is an argument for ‘making hay while the sun shines’.
Yes, there is the counterargument about not owing anyone else a living and getting out of the rat-race.
But, speaking as a parent, I’d happily work a few extra years if it meant safeguarding my children’s future.
Lucius Lamb
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Even with a seven-figure ARF, OP has limited capacity to be flaithulach based on @Sarenco's scary numbers.
Amend those numbers with a constant 4%/5% withdrawal (and not €40k p.a.) and look the difference. Cut your cloth/work seasonal jobs/dip into savings buffer as needed or available in any down years to cover the reduction in income.
50+O
Late to this thread,
i would clear ALL loans inmediately, you have additional cashflow from doing this of €700 per month.
For rainy day fund, you have the ARF, easily and reasonably quick access, as others have said, so you don’t need multiple rainy day funds, plus the ARF will hopefully be growing over time.
I think you may be underestimating your childrens financial needs. They will, eventually be looking for assistance with maybe a house purchase or a wedding. You have circa 9k extra per year in cashflow, if all loans cleared, this will do for that purpose, as they maybe some years off, needing it.
It makes sense to retire before 60 due to the 4% looming imputed distribution. I would retire now if it were me, as you will be faced with significant tax bills, In fact with a pension pot that size, large tax bills are inevitable, as you will be effectively forced when you hit 60, to make 50k ish withdrawals, depending on the ARF balance 3 years from now, if you don’t retire before 60.
Say you retire now, take say 40k a year until you hit 60, try and put say 20% of that away for long term saving. after that, the balance in the ARF decides what you withdraw, you then have a few years before the state contributory pension kicks in.
Keep an eye on/ forecast nett income for th e next 10 years, adjust spending accordingly.
As Regards, the State Contributory Pension- a 12.5k per annum minimum annual ARF withdrawal, is enough for full entitlement of that, assuming you qualify.
There is also the AMRF to consider, after State Contributory Pension kicks in.
At the end of the day, if you enjoy working - then stay working, thats a key question, and should over-ride any tax bill concerns.
i would clear ALL loans inmediately, you have additional cashflow from doing this of €700 per month.
For rainy day fund, you have the ARF, easily and reasonably quick access, as others have said, so you don’t need multiple rainy day funds, plus the ARF will hopefully be growing over time.
I think you may be underestimating your childrens financial needs. They will, eventually be looking for assistance with maybe a house purchase or a wedding. You have circa 9k extra per year in cashflow, if all loans cleared, this will do for that purpose, as they maybe some years off, needing it.
It makes sense to retire before 60 due to the 4% looming imputed distribution. I would retire now if it were me, as you will be faced with significant tax bills, In fact with a pension pot that size, large tax bills are inevitable, as you will be effectively forced when you hit 60, to make 50k ish withdrawals, depending on the ARF balance 3 years from now, if you don’t retire before 60.
Say you retire now, take say 40k a year until you hit 60, try and put say 20% of that away for long term saving. after that, the balance in the ARF decides what you withdraw, you then have a few years before the state contributory pension kicks in.
Keep an eye on/ forecast nett income for th e next 10 years, adjust spending accordingly.
As Regards, the State Contributory Pension- a 12.5k per annum minimum annual ARF withdrawal, is enough for full entitlement of that, assuming you qualify.
There is also the AMRF to consider, after State Contributory Pension kicks in.
At the end of the day, if you enjoy working - then stay working, thats a key question, and should over-ride any tax bill concerns.
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