Money Makeover - How can I plan to retire in my 50s?

Dr Strangelove said:
In theory, yes.

I personally know exactly zero Irish people who have ever done this.
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I think that's a bit old school now though. I personally know many who have, and not when they're in their seventies either.
And point is they can. If finances are an issue they may have to also.
 
arbitron said:
It's not a particularly liquid asset and if you have a mortgage then you have a concurrent liability. Worse again, you could be in negative equity.

You always need somewhere to live, so even if you realise the value of your PPR, you will automatically have a new cost/liability in the form of rent or a house purchase (although purchasing a new house could then be an asset).

In our household budgeting, we include the mortgage as a liability and we do not include our PPR as an asset.
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It still doesn't make sense to me. If you have 300k in the bank and are renting, your net worth is 300k. If you use that 300k to purchase a place to live your net worth is still 300k, ie you can sell it again and rent if necessary.
 
Boyddbookman said:
As per the original request to which I responded, in my experience, 99.9% of people will not become wealthy from wihtin the PAYE system especially when considering the extortionate PAYE rates. That is the context of the point I made.
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Tax credits and rates are the same in the PAYE system, and outside it.

A farmer is self-employed, does not PAYE, but faces the same tax credits, SRCOP, etc. as all PAYE workers.

You seem to imply that non PAYE pay less income tax on the same income as PAYE workers?
 
Given the hassle, legal costs, and time spent viewing houses, applying for mortgages, etc., I often wonder where or how people get the time away from a busy job to repeatedly buy, manage and sell houses.
 
Gordon Gekko said:
Lots of people working for multinationals or in financial services would dispute that.
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There may be lots of people in that category but they're still a relatively small % of the PAYE population. I think the general statement that 99.9% of people will not become wealthy from within the PAYE system is still broadly true. The vast majority of the PAYE population are unlikely to become wealthy solely as a result of their employment.

Latest Revenue figures below for 2021 have only 7.7% of PAYE workers earning over €100k. Given the tax on that and the low spending power here its more a case of surviving and making the most of it rather than really getting wealthy. We may get lucky with our PPR and maybe our pensions if we're in them early and deep enough but our wealth is unlikely to be from earnings within the PAYE system for the vast majority.

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Redzer said:
There may be lots of people in that category but they're still a relatively small % of the PAYE population. I think the general statement that 99.9% of people will not become wealthy from within the PAYE system is still broadly true. The vast majority of the PAYE population are unlikely to become wealthy solely as a result of their employment.

Latest Revenue figures below for 2021 have only 7.7% of PAYE workers earning over €100k. Given the tax on that and the low spending power here its more a case of surviving and making the most of it rather than really getting wealthy. We may get lucky with our PPR and maybe our pensions if we're in them early and deep enough but our wealth is unlikely to be from earnings within the PAYE system for the vast majority.

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7.7% is a lot more than 0.1%. And those numbers don’t capture appreciation in the value of stock options on which tax has already been paid. Nor do they capture large share awards that aren’t multi-year.

It depends on your definition of ‘wealthy’. I would class ‘wealthy’ as net assets including one’s home of, say, €3m or more, without massive concentration in terms of the value of that home.

e.g. €1m home, €1m pension fund, €1m cash/investments is ‘wealthy’. €3m home and nothing else probably isn’t.
 
Gordon Gekko said:
7.7% is a lot more than 0.1%. And those numbers don’t capture appreciation in the value of stock options on which tax has already been paid. Nor do they capture large share awards that aren’t multi-year.

It depends on your definition of ‘wealthy’. I would class ‘wealthy’ as net assets including one’s home of, say, €3m or more, without massive concentration in terms of the value of that home.

e.g. €1m home, €1m pension fund, €1m cash/investments is ‘wealthy’. €3m home and nothing else probably isn’t.
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Agreed that it depends on your definition of 'wealthy' and yours is a very good one but its still not one that the vast majority of the PAYE population will realistically attain purely as a result of their PAYE Income. The 7.7% of the PAYE population earning €100k+ are actually contributing 54% of the overall Income Tax take so I'd wonder how many of them are accumulating wealth to the level you define.

Early retirement is part of my definition of wealth and Boyddbookman achived this through continuous diversified investments worked over a 25 year period. While we may differ on our guesstimates of the exact % of the PAYE population that will be 'wealthy' or even what that means, I agree with his central point that people will not become wealthy from within the PAYE system.
 
I think this conversation is gas.

Dublin is full of PAYE folk living in €1m+ houses, with substantial cash savings and accrued pension entitlements with an actuarial value north of €1.5m. Think hospital consultants, senior public servants, etc.

By any reasonable definition, these folks are wealthy.
 
I agree with those commentators that are saying that in all likelihood the vast majority of those solely in paye employement will not and cannot get 'wealthy' (by any real definition) from that paye job. I think its a very reasonable thing to say.

Ok theres many paye workers earning very well but as another poster said even if earning really well, say for example 150k per yr, you are NEVER going to get wealthy on that unfortunately. Tax and spending power is the reason why.

To get wealthy you would probably need to be a successful business owner. I dont even know, i wish i did know.

Maybe if you are on 400k+ then over time you may find that you are suddenly 'wealthy'. 400k is what...200k after tax so say 20k approx per month net. Yes thats loads but then youre prob spending half of that per month if you live in dublin have a family and big house. So what then, you save 10k per month. Yes fair enough youre wealthy but christ youre in the minority.
 
This thread has gone completely off topic and of no use to the original poster.

Retiring in 50's means you need at least 10 years of living expenses before you touch your pension.

Work out how much you'll need to live - paying for kids and lifestyle at 50, 55 and 60 - they'll be in college.
Then thats the after-tax pot you need (plus safety net fund).
Say you want 3k net per month - thats 360,000 for 10 years (not including college/kids expenses)

So, by 50 you need that amount, plus your mortgage paid off, plus your pension completely funded to be able to draw it down at 60.
A quick look at a calculator suggests you need to put in 2,000 per month until age 60 to get 3000per month in retirement.

So you'll need to continue to fund that in the 10 years of your early retirement, or supercharge your pension now.
You're currently putting 2.6k per month away.

360,000 plus 240,000 (pension) plus college fees (2 kids @6,000 per year minimum = 36,000 not including a masters)
Plus pay off the 600,000 plus interest you owe on your house

That's what, 1.2 million at least? - your earning potential is 180,000 per year as a couple with 15 years earning until you get to 50. Not including the stocks.

Run those numbers and you'll know what you need to do. It's irrelevant getting advice on what stocks or funds to select when you don't know how much money you'd need to get by
 
There is a whole cohort of people that seem to slip under the radsr in discussions about what constitutes ‘wealthy’ or an ability to become ‘wealthy’. For example, aircraft leasing is huge in Ireland, and there are loads of former solicitors who gave up €150-200k jobs to earn €350-400k just to chase down broken lease agreements.

There are lots of professionals paying their PAs €60k a year plus €20k bonus; those people have the ability to become wealthy if they’re smart.

I wouldn’t dream of telling my kids ‘PAYE bad’. There are a myriad of superb PAYE jobs out there…multinationals, the government, semi-states, medicine, financial services, etc.
 
This is what helps make you wealthier imo

Increase income (change industry, skill up, change job, do extra work, optimise assets/investments)
Lower spending.
Keep your spending growth rate lower than income growth rate. (Ensures your excess cash, available to invest, is always growing)
Constantly Invest excess cash (or time) into assets or reducing debt.
Manage your assets. (Varying amount of work depending on assets, e.g. often best way to manage diversified equity, is just to give it more time).
Minimise tax drag.

Whether your income comes from paye / sole trader / partnership / family business / rental / dividends is irrelevant. If your are spending more than saving wealth decreases.

Whether and how much you choose to invest in globally diversified equity, property, or your own business, or just bank deposit etc. will ultimately affect the future value of your assets. They have different risk and return profiles.
 
I agree with Gordan, Sarenco and others that there are some very high earning sectors and of course working there makes it easier to become wealthier, once you are controlling your spending.

Also note that Boyd said he was earning very good paye income, which obviously helped him start investing and building non paye income/wealth.
 
Tax free compounding of globally diversified portfolio will be important for you.

As will access to money before you can draw down pension.

How much is partner putting into pension? Can you put nearly all of partners earnings into her pension? Sometimes there is more flexibility, within own company on what you can contribute.

Investigate at what age and under what condition are you can access your pensions. Some allow from age 50 once you have retired from the employment/company that was funding it.
 
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