How to reach retirement fund of 1M

A

aam514

Registered User
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I posted previously here. And here again are my details, my question is different this time.

Age: 47
Spouse’s/Partner's age: 49

Annual gross income from employment or profession: 90,000
Annual gross income of spouse: 48,000

Monthly take-home pay: 7200

Type of employment: e.g. Both are private sector

In general are you: Saving. it varies between 250 and 750/month

Rough estimate of value of home: 405,000
Amount outstanding on your mortgage: 278,000 and 16 years
What interest rate are you paying? 2.3% Fixed for next 18 months; will then change to 4.3% Variable

Other borrowings – car loans/personal loans etc: None

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

Savings and investments: 65,000 in a few different accounts between the 2 of us.

Do you have a pension scheme?: Yes, 170,000 in my scheme ; I pay 5% and this is matched by the company; Spouse has about 100,000 in her scheme; she pays 6% and this is matched by her company. 5 and 6% are the maximum both companies match.

Do you own any investment or other property? Yes, approximately valued at 300,000 with mortgage of 26,000 outstanding; repayments are 912/month; Interest rate is 0.6% Tracker with about 2.5 years left. We rent it out at 1650 per month. The annual tax bill is about 7000.

Ages of children: None

Life insurance: Yes, not sure on the details but I think it's about 4 times our salaries

What specific question do you have or what issues are of concern to you?
Assuming we sell the investment apartment and use the funds to clear the PPR mortgage, we would have a pension fund totaling 270,000 but able to bump up our AVC as we would no mortgage payments.

If we want to reach the goal of 1M pot for retirement, can someone help me to calculate how quickly and how much %AVC we would need to contribute to get to that figure? Or to put my question another way, what age could we expect to retire with a fund of 1M?

Thanks
 
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Very rough (read the assumptions!) calculator here that is quite easy to toy around with - https://www.newireland.ie/pension-calculator/

So your monthly contributions are €1100€1230 between the two of you, €270k current pension fund (you say €370k but €100k/€170k mentioned further up). Leaving your contributions as they are, if you worked to 75 your pension pot would be about €825k.

If you wanted to get to a €1m pot by say 65 you'd need to up your monthly contributions to about €3300 (or do an AVC of €25k), increasing this contribution by 2.5% per year until retirement.
 
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Zenith63 said:
Very rough (read the assumptions!) calculator here that is quite easy to toy around with - https://www.newireland.ie/pension-calculator/

So your monthly contributions are €1100 between the two of you, €270k current pension fund (you say €370k but €100k/€170k mentioned further up). Leaving your contributions as they are, if you worked to 75 your pension pot would be about €800k.

If you wanted to get to a €1m pot by say 65 you'd need to up your monthly contributions to about €3300 (or do an AVC of €26k), increasing this contribution by 2.5% per year until retirement.
Click to expand...

Thank you. Sorry my maths is terrible, 270 it should be. I will edit the post.
 
Our monthly contributions are as follows:
Me -> 5% of 90,000/12=375
My employer -> 5% of 90,000/12=375
Wife -> 6% of 48,000/12=240
Wife's employer -> 6% of 48,000/12=240
TOTAL 375+375+240+240=1230

Our current pot is 270,000 as you correctly point out

If we were to contribute an additional 1800/month in AVCs, what age would we be to get to a pot of 1M? (The additional 1800/month is the money after tax we would have to contribute were we to sell the investment property and pay off both mortgages)
 
Yep bad bit of Calculatoring there on my part!

I think others more offay with this stuff will be able to comment better, understanding your tax bracket, maximum contributions etc. However the extra €1800 in aftertax income (so roughly €3600 in gross income) you have available easily gets you to your maximum contribution on which tax relief is available of €2875 a month (25% of your salaries). Again others can confirm if employer contributions count towards the limit for the type of pensions you have. But if you went with that contribution plus employers you'd get to €1m at 65.

However your maximum tax free contribution increases as you age, and afraid that's where I reach the limits of the newireland calculator...
 
I'm a public sector employer. I will have full pension by 65. Post 95 employee.

My lump sum will be approx 140,000. Sure I start doing a private Pension also?

Do I get tax relief on some or all of any private Pension contributions?

I know 200,000 is the tax free lump sum (is that a certain fixed % of pension pot or what) but I can get another 300,000 taxed at 20% also (again is this a fixed percentage of final pension pot?)
 
PebbleBeach2020 said:
I'm a public sector employer. I will have full pension by 65. Post 95 employee.

My lump sum will be approx 140,000. Sure I start doing a private Pension also?

Do I get tax relief on some or all of any private Pension contributions?

I know 200,000 is the tax free lump sum (is that a certain fixed % of pension pot or what) but I can get another 300,000 taxed at 20% also (again is this a fixed percentage of final pension pot?)
Click to expand...
Suggest you create a separate thread.
 
AAM

There are several variables that affect the timeline - the main one being your pension fund return. i.e. At 3% average it would probably be 65 years, but at 8% average * it would be closer to 60years (guesswork). Do you have an expected rate of return?
* Average 15 year return for the last 40 years in MSCI world equity is around 8% I believe.. past performance and all that.

there is also salary increases and AVC's, The best you can do to put yourself in the position to achieve the goal asap is to both maximise your contributions based on the max tax relief thresholds:

40-4925%
50-5430%
55-5935%
60 or over40%

I find a spreadsheet helps me better stress test the variables adjusting them to see the impact to the anticipated fund.

50andO
 
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