Age: 49
Spouse’s/Partner's age: 49
Annual gross income from employment: €75K (Private sector)
Annual gross income of spouse: €75K (Pre-93 public sector)
Monthly take-home pay: €5,500 after AVCs, pensions etc
Type of employment: Private Sector / Public Sector (pre-93)
In general are you:
(a) spending more than you earn, or No
(b) saving? €2K per month
Rough estimate of value of home: €350K
Amount outstanding on your mortgage: €120K
What interest rate are you paying?: 0.8% - Tracker - 10 years left
Other borrowings – car loans/personal loans etc: 0
Do you pay off your full credit card balance each month?: Yes
If not, what is the balance on your credit card?: 0
Savings and investments: €55K split between equities and cash - Also put €150pm into fund for childs education since birth which will continue
Do you have a pension scheme? Both have one.
Spouse has standard public servant pension plus also AVCs. AVCs are worth €110K as of last week and pays €400 per month into it.
Mine is company pension scheme. Worth €375K as of today. I pay 25% of salary and company pays 7.5% of salary and when im 50 next year will increase to 30% from my salary.
Do you own any investment or other property? Yes (Tracker of 0.5%, remaining term <11 yrs. pre tax profit of €12K p/a. Worth €195K, €61K left on mortgage)
Ages of children: 1 child - age 7
Life insurance: €150 pm total for life insurance and mortgage protection insurance, plus work insurances.
What specific question do you have or what issues are of concern to you?
1 - We are happy enough where we are at the moment and have no issues with spending or saving etc,
But it has come to our attention that my spouse may be overpaying into AVCs. And that at drawdown if we are in the high tax bracket with our pensions that there is no advantage at the moment to be getting the tax relief on the public sector AVCs as they will be taxed at the higher rate anyway, even if I draw a small enough amount to get us into the lower tax bracket when we retire. Could this be true. Have we gone over the limit where it is tax efficient to keep paying into AVCs at this point and have too much paid into my spouses AVCs? Should we stop paying AVCs for for my spouse. . If we stop where should we invest that money?
I plan to keep paying the max rate allowed anyway into mine. But worried we are wasting our time putting it into spouses AVCs with the fund value at this point and that we would be better off just banking the cash as there might be no benefit from putting it away. Or is there a benefit in putting it into spouses AVCs over keeping it as cash?
2 - We are thinking of both retiring in 5 or 6 years. Would this be possible on what we are putting away now? If we did retire at €55 we would plan to have enough cash put away to pay off the mortgages if needed at that point, or just leave them be as they are not much monthly.
Thanks in advance guys
Spouse’s/Partner's age: 49
Annual gross income from employment: €75K (Private sector)
Annual gross income of spouse: €75K (Pre-93 public sector)
Monthly take-home pay: €5,500 after AVCs, pensions etc
Type of employment: Private Sector / Public Sector (pre-93)
In general are you:
(a) spending more than you earn, or No
(b) saving? €2K per month
Rough estimate of value of home: €350K
Amount outstanding on your mortgage: €120K
What interest rate are you paying?: 0.8% - Tracker - 10 years left
Other borrowings – car loans/personal loans etc: 0
Do you pay off your full credit card balance each month?: Yes
If not, what is the balance on your credit card?: 0
Savings and investments: €55K split between equities and cash - Also put €150pm into fund for childs education since birth which will continue
Do you have a pension scheme? Both have one.
Spouse has standard public servant pension plus also AVCs. AVCs are worth €110K as of last week and pays €400 per month into it.
Mine is company pension scheme. Worth €375K as of today. I pay 25% of salary and company pays 7.5% of salary and when im 50 next year will increase to 30% from my salary.
Do you own any investment or other property? Yes (Tracker of 0.5%, remaining term <11 yrs. pre tax profit of €12K p/a. Worth €195K, €61K left on mortgage)
Ages of children: 1 child - age 7
Life insurance: €150 pm total for life insurance and mortgage protection insurance, plus work insurances.
What specific question do you have or what issues are of concern to you?
1 - We are happy enough where we are at the moment and have no issues with spending or saving etc,
But it has come to our attention that my spouse may be overpaying into AVCs. And that at drawdown if we are in the high tax bracket with our pensions that there is no advantage at the moment to be getting the tax relief on the public sector AVCs as they will be taxed at the higher rate anyway, even if I draw a small enough amount to get us into the lower tax bracket when we retire. Could this be true. Have we gone over the limit where it is tax efficient to keep paying into AVCs at this point and have too much paid into my spouses AVCs? Should we stop paying AVCs for for my spouse. . If we stop where should we invest that money?
I plan to keep paying the max rate allowed anyway into mine. But worried we are wasting our time putting it into spouses AVCs with the fund value at this point and that we would be better off just banking the cash as there might be no benefit from putting it away. Or is there a benefit in putting it into spouses AVCs over keeping it as cash?
2 - We are thinking of both retiring in 5 or 6 years. Would this be possible on what we are putting away now? If we did retire at €55 we would plan to have enough cash put away to pay off the mortgages if needed at that point, or just leave them be as they are not much monthly.
Thanks in advance guys