Pension value is currently 190k. No idea if this is good or not?

The figure we came up with is €5k net a month in today’s terms. So if we were retiring today, we’d want €5k a month net to cover all angles. And that gives plenty of wriggle-room. It might sound like a lot to some people or a little to other people. I was actually surprised and expected it to be more.
 
Gordon Gekko said:
The figure we came up with is €5k net a month in today’s terms. So if we were retiring today, we’d want €5k a month net to cover all angles. And that gives plenty of wriggle-room. It might sound like a lot to some people or a little to other people. I was actually surprised and expected it to be more.
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Thanks for sharing - interesting. I've been doing some similar calculations but in less detail that you. Turns out Mrs TTP and I are nearly at 5k per month there by just combining: 1 UK state pension each, 1 Irish state pension each, 1 NHS pension (8 years' service), 1 UK university scheme pension (12 years' service). I've just set up an Exec Pension now, but really not sure I need to kill myself working hard until I'm 65 to max my pension.
 
time to plan said:
Thanks for sharing - interesting. I've been doing some similar calculations but in less detail that you. Turns out Mrs TTP and I are nearly at 5k per month there by just combining: 1 UK state pension each, 1 Irish state pension each, 1 NHS pension (8 years' service), 1 UK university scheme pension (12 years' service). I've just set up an Exec Pension now, but really not sure I need to kill myself working hard until I'm 65 to max my pension.
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Likewise, thanks for sharing. I think it’s a useful exercise to share. AAMers are prudent by definition, but the big takeaway for me is that it was less than I thought so I could hang up my boots earlier than I thought. Not that I will, but it’s comforting to know that a time will come when you don’t absolutely have to work.
 
Gordon Gekko said:
The figure we came up with is €5k net a month in today’s terms. So if we were retiring today, we’d want €5k a month net to cover all angles. And that gives plenty of wriggle-room. It might sound like a lot to some people or a little to other people. I was actually surprised and expected it to be more.
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That's a good way to look at it, start with net monthly requirements, work forwards.

Begs the question, how to reverse engineer that 5k a month into gross pension pot needed at retirement to fund 30 years retirement.

Even a back of envelope type calc that takes in state pension from 67, tax, assumes retire when state pension kicks in. Or is there an online calculator for this?
 
Steven Barrett said:
Did you add in the extra expenditure purely because you have more free time? Able to go away whenever you want? Spending more money purely because you aren't in work. Retirement isn't as cheap as people think it is.



Doesn't mean the kids won't be looking for financial help. "Help the kids out" is now a common expenditure for parents, especially with the way house prices are. I wouldn't presume that they will stop being an expense once they finish college.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
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Yes I guess that is a reasonable assumption regarding kids in the future. Both are planning to pursue professional qualifications in the medical field so all going well they will have good paying careers from an early age. Of course, I have no crystal ball so can only speculate as to how that will unfold.
 
David_Dublin said:
That's a good way to look at it, start with net monthly requirements, work forwards.

Begs the question, how to reverse engineer that 5k a month into gross pension pot needed at retirement to fund 30 years retirement.

Even a back of envelope type calc that takes in state pension from 67, tax, assumes retire when state pension kicks in. Or is there an online calculator for this?
Click to expand...

Yep working out your expenses is key. As mentioned higher up, re the general rule of thumb figure = 25x annual exp. (google 4% rule)

Calculating at retirement age makes it quite simple as you don't need to adjust for higher drawdown initially. -Annualise the €5k = €60k - minus any state pension entitlement/other income, then multiply by 30. (assume inflation is covered by fund growth).

Its a very basic back of the envelope idea.
 
So you recon a pens
50andOut said:
Yep working out your expenses is key. As mentioned higher up, re the general rule of thumb figure = 25x annual exp. (google 4% rule)

Calculating at retirement age makes it quite simple as you don't need to adjust for higher drawdown initially. -Annualise the €5k = €60k - minus any state pension entitlement/other income, then multiply by 30. (assume inflation is covered by fund growth).

Its a very basic back of the envelope idea.
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So you recon a pension fund of €1.5m will provide an annual pension of €50,000 (€1.5m divided by 30)?
 
Wm Kee said:
So you recon a pens

So you recon a pension fund of €1.5m will provide an annual pension of €50,000 (€1.5m divided by 30)?
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based on the question asked "to reverse engineer that 5k a month into gross pension pot needed at retirement to fund 30 years retirement."

The maths is simple as its a back of envelop guide - take 40k per year from 1.2 million and it will last 30 years. (Assuming there are state pensions covering the extra 20k, but adjust the annual required expense as required)

no sequence of return risk, taxation or inflation taken into consideration.
 
Gordon Gekko said:
Yep, that’s why I use 5%.

Better to end-up with Gran Reserva instead of Reserva through investment performance rather than ending-up with Crianza because your plan was too aggressive…
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You could always buy a small vineyard, produce your own wine, and save a fortune on retail prices ...

Then you wouldn't have to worry about investment performance, and perhaps even reduce your current contributions... which could then be put towards buying more gran cru now ;)

So, next things to worry about are the cost of living, and the tax implications, if you emigrate to one of the wine growing countries. :D
 
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David_Dublin said:
That's a good way to look at it, start with net monthly requirements, work forwards.

Begs the question, how to reverse engineer that 5k a month into gross pension pot needed at retirement to fund 30 years retirement.

Even a back of envelope type calc that takes in state pension from 67, tax, assumes retire when state pension kicks in. Or is there an online calculator for this?
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It's not very straight forward. We have different sources of income becoming available at different times and at different taxation levels. Also, most people take their ARF income as a percentage and not as a fixed amount, so that income will vary too.

Then your expenditure will vary too. The first few years in retirement will most likely be the most expensive. You get a big lump sum and spend it on changing the car, fixing up whatever in the house, big holiday etc. You are also younger and the thoughts of being in the airport 5-6 times a year is fine. As you get older, you will spend less but if health deteriorates, you may spend more on medical bills. Care homes is a massive expenditure at the end but thankfully we have a system here that if you don't have any money left, the State will help out. Otherwise, you will be keeping a huge chunk of your retirement fund for care home costs; something you may never actually avail of.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Gordon Gekko said:
The figure we came up with is €5k net a month in today’s terms. So if we were retiring today, we’d want €5k a month net to cover all angles. And that gives plenty of wriggle-room. It might sound like a lot to some people or a little to other people. I was actually surprised and expected it to be more.
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If your were to retire today, hypothetically speaking how are you going to fund the €5k a month which I presume is around the €90 to €100k a year gross.
 
David_Dublin said:
If your were to retire today, hypothetically speaking how are you going to fund the €5k a month which I presume is around the €90 to €100k a year gross.
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It’s nowhere near that actually. With two incomes, it’s about €68k in total from age 70.

PRSI disappears from age 66 and USC falls at age 70.

I’ve a State Pension entitlement (no USC), let’s call that €13,000.

Taxable rent is about €15,000.

Mrs Gekko has a DB pension which would more than bridge the gap.

And that’s before I take my fund into account.
 
Gordon Gekko said:
It’s nowhere near that actually. With two incomes, it’s about €68k in total from age 70.
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On the face of it it all sounds good, State Pension, Rental Income and the jewel in the crown the "DB"
With the added bonus of a cherry on the top your own fund, what's not to like about that plan

Though I am a little surprised that €68k nets down to €60k, it's not an area that I've given much thought to at the moment
simply because it's a good 15 years away for us and a lot can/is going to change in those years with regards to taxation and wealth
 
Cervelo said:
. .. it's a good 15 years away for us and a lot can/is going to change in those years with regards to taxation and wealth
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I am running into more and more people, who are considering retiring abroad, primarily due to concerns about Ireland's future tax regime.
 
MrEarl said:
I am running into more and more people, who are considering retiring abroad, primarily due to concerns about Ireland's future tax regime.
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Yeah it's a topic that I hear myself from time to time and something that crosses my mind at least a few times a year
but on those days I'm not really thinking about bang for your buck but rather how I can improve the weather and make it more consistent

When I'm in Spain I run into quite a few English people who made the move to Spain before Brexit for this reason
Now some of them have had to readdress the move because of Brexit and the implications of it on their retirement plans and finances
Myself I'd love to sell up and move, my heart and head say do it but my gut shouts No because it would be a irreversible move.
 
MrEarl said:
I am running into more and more people, who are considering retiring abroad, primarily due to concerns about Ireland's future tax regime.
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That's odd, as my retired parents pay 8% approx direct taxes on their 50k approx income, and anywhere else would charge higher taxes for the benefits they receive:

two medical cards
two FTP
free TV licence
35 pm off elec / 420 pa


We have very low effective tax rates, relative to the benefits.
 
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