Plan to retire 2026, considering bringing it forward to this year.

AppleVenus said:

so the years we spent in the US are reciprocated as 52 week’s contributions in Ireland.

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Is this what your PRSI record available from myWelfare says right now?

AppleVenus said:

We’ve discussed it and are going to start April 1st (so I can measure & track it easily).

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If you mean analysing your expenditure/budget then you should be able to do this retrospectively by downloading a year or more of bank statements, sticking the figures into a spreadsheet and then categorising/analysing them there.

AppleVenus said:

if I want to estimated the benefit of an additional year income to our pension pot I could use a 4% rule of thumb for the annual pension return. So let’s say I contribute 10,000/year to my pension the return from that will be 400 a year gross. Is that a good rule of thumb?

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There are loads of pension calculators and even the likes of AI/ChatGPT that you can use to model such scenarios. Obviously any assumed annual growth figure is just that - an assumption that may or may not be realistic.

BTW - are the charges on your pensions competitive?

AppleVenus said:

100% agree. This discussion has focused my mind on getting into the detail and properly understand. I already have line items in my spreadsheet which will be terminated on retirement, some are already being questioned pre-retirement.

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When I analysed my expenditure (well before I retired) at first everything appeared to be essential. I spent a good bit of time gathering base data (spending) and went through a few iterations analysing and classifying it and the final one found things parked in one of four buckets:

• the essentials - Electricity, Gas, Broadband, House Insurance, Car expenses, LPT, TV licence, Health Insurance etc. At first glance you can't do much about these, but of course you will have time to become more vigilant (e.g. rather than letting things auto-renew as many busy working people do, shop around each year), ditch the landline, etc. Also it's worth thinking about motoring expenses afresh, e.g. 2 cars..... ?
• shopping - groceries, booze, clothes, etc. A broad category and a big chunk of change. When you root around under the covers there are definitely opportunities. A lot of busy people/couples take a scatter gun approach to shopping, jumping into highish-price convenience stores to pick up something for dinner and coming out with an armful of stuff that cost €67, some of which gets binned from the fridge a week later half-used or unused. I certainly rediscovered the benefits of "the weekly shop" (once I got over the feeling that I was turning into my parents) that starts with a list, and it's actually one of the milestones of the week. Any supplementary trips need to be limited to one or two essentials or perishable ingredients (e.g. fresh fish or something you have a hankering for on a Friday night). The same goes to clothes shopping, visits to hardware stores, middle aisles etc. It's not about becoming a misery guts and mindlessly watching every penny, it's about taking a more organised and disciplined approach. You can still go to the farmers market or the deli for specials/treats. And avoiding that dreadful phenomenon known as "leisure shopping"
• things that bring you joy - I hate the phrase but it perfectly describes what I am getting at. It may be gym or tennis or golf club membership, magazine or other subscriptions, concert tickets, visits to the hair dresser or nail bar, coffee & scone or pint money, charitable donations, gardening expenses, family presents, travel and leisure etc etc. A lot of this may appear at first to be discretionary expenditure and maybe could go into the final bucket for serious review - do not be tempted to put it there and do not class this as luxuries. It is every bit as important as the previous two categories, especially for your contentment and mental health. Retirement isn't about vegetating on a couch or keeping yourself busy by acting as an unpaid minder for grandchildren seven days a week. Your retirement, and in particular your 60s, should be the some of the best days of your life, you need mental stimulation, physical and intellectual challenges and enjoyment. This is really really important.
• the final bucket - all the other stuff. anything that makes it into this bucket needs to seriously stand on it's own two feet and justify its existence. Treat it like a reboot and be really ruthless.

Reading between the lines, I suspect you already have a good handle on all of this, and won't in any case be daunted by the exercise. And as I said previously, as well as giving you a good handle on the numbers it will also give you confidence for the future that your finances will work out in the longer term. There is a side benefit in that evaluating and questioning all of this will prompt a lot of questions about how you will occupy your time, what are the things you always wanted to do but haven't yet had the opportunity to try, what's important and what's not and other thoughts and ideas that will help form your glide path to retirement.

AppleVenus said:

This is a great idea and I wish I had thought of it. We’ve discussed it and are going to start April 1st (so I can measure & track it easily).

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No need to limit this dry-run to just the your expenditure. You can also practice a few other aspects of retirement. Well before I retired I took a day off work on a weekday. Had a lie in and spent a couple of hours in the garden, then walked to the pub at midday with a copy of the Irish Times, sat at the counter with a pint and then had lunch and desert followed by a leisurely stroll home. Something I had never done before and I greatly enjoyed it and it really whetted my appetite for retirement as I loved that feeling of being free and in control and not thinking about deadlines or dealing with cranky e-mails. You mentioned inter-railing, why not try a one week off-peak train trip this year, and make the budget a fun challenge. Or a week in a warmer climate later in the year, self catering accommodation, off peak and off the beaten track, nothing flash, again challenging yourself budget wise. Whet your appetite and get you counting down the days !!

AppleVenus said:

I have a question for those who understand these things: if I want to estimated the benefit of an additional year income to our pension pot I could use a 4% rule of thumb for the annual pension return. So let’s say I contribute 10,000/year to my pension the return from that will be 400 a year gross. Is that a good rule of thumb?

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Yep, that’s about it. But tbh, I think you’re more or less there on pension pot size, think of the next year as funding your home improvements and creating a cushion from an inevitable market correction (be that a crash or a lost decade) so that you can comfortably draw 4% a year without worrying about running out. It’s also a bit about learning the discipline needed for a smaller budget.

Thank you all, this has been a very motivating and informative discussion. I've learned about some topics I need to consider before retirement & some practical approaches to better understanding of our budgeting.