Rental property as a pension

I don't think the start of retirement is the time to buy property in particular with your life savings.

There are teething issues with rental properties early on.

Also usually makes sense to use "other people's money".

Best thing IMHO is to keep the 250k as liquid asset.

Why is it currently on deposit and not invested?
 
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OP how much is your fathers home worth, how big is it and who lives there.
 
Introuble83 said:
Just my parents
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Does your mother have a separate source of income or is she dependant on your father's income?

Also, is it a genuine case of your father "wanting" (as opposed to "needing") to retire?

I hope you don't think I'm being overly nosey - I'm just trying to get a sense of what level of income your parents require for a comfortable retirement.
 
Introuble83 said:
Worth 400k 3 bed semi . Just my parents . They will not sell up or rent out rooms in the house under any circumstances
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With 250k in cash savings, they be mad to sell anyway and few older people would want lodgers in their home.
 
Sarenco said:
Does your mother have a separate source of income or is she dependant on your father's income?

Also, is it a genuine case of your father "wanting" (as opposed to "needing") to retire?

I hope you don't think I'm being overly nosey - I'm just trying to get a sense of what level of income your parents require for a comfortable retirement.
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My mother is on illness benefit due to a medical condition . I am not exactly sure how much value around 200 a week I think

He wants to retire . He could physically work another few years but works in construction the last 40 years and is feeling a bit tired at this point
 
moneymakeover said:
I don't think the start of retirement is the time to buy property in particular with your life savings.

There are teething issues with rental properties early on.

Also usually makes sense to use "other people's money".

Best thing IMHO is to keep the 250k as liquid asset.

Why is it currently on deposit and not invested?
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He would have little knowledge of investments and is very prudent. I think he is happy to know the money is safe and has little interest in making a profit. He just wants enough income to live on .
 
Introuble83 said:
My mother is on illness benefit due to a medical condition . I am not exactly sure how much value around 200 a week I think

He wants to retire . He could physically work another few years but works in construction the last 40 years and is feeling a bit tired at this point
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Your father could draw unemployment benefit for 9 months, though I think he may be penalised for first 9 weeks if he leaves his job voluntarily, however, this this might be waived if he can show the work was wearing him out and he's willing to look for an easier employment position. Also after age 62, he will not be expected to engage with the work activation process, rather he will be allowed to sign on once a year in order to keep his prsi contributions up todate until he reaches state pension age at 66.
 
Saavy99 said:
Your father could draw unemployment benefit for 9 months, though I think he may be penalised for first 9 weeks if he leaves his job voluntarily, however, this this might be waived if he can show the work was wearing him out and he's willing to look for an easier employment position. Also after age 62, he will not be expected to engage with the work activation process, rather he will be allowed to sign on once a year in order to keep his prsi contributions up todate until he reaches state pension age at 66.
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Yes but after 9 months he goes on unemployment assistance until 66.

Having his wealth in cash savings is not good in these circumstances. The calculations are complex but I think he would not get anything at all. Am open to correction on this.
 
Gordon Gekko said:
- Buy €160k worth of IRES shares, i.e. the Irish Real Estate Investment Trust, which would give your father a tiny share of thousands of Irish residential properties instead of a 100% share of one with all of the hassle that brings

- The dividend income on that would be circa 4%, i.e. €6,400 per year. This would be tax-free for your father.
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Can you explain why is this dividend income tax-free?
 
NoRegretsCoyote said:
Yes but after 9 months he goes on unemployment assistance until 66.

Having his wealth in cash savings is not good in these circumstances. The calculations are complex but I think he would not get anything at all. Am open to correction on this.
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Doubtful but at least by signing on yearly he keeps his prsi contribution up to date.
 
Sarenco said:
I personally wouldn't retire early to live on €20k a year if I had any choice in the matter.

That would be a fairly lean amount to live on, even with no debts or dependants
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But you and I have expensive tastes Sarenco!

It’s not that bad, €1,700 odd a month with no accommodation costs.

Wouldn’t be my cup of tea but plenty of people would jump at it.
 
It really depends on what you are used to, and your expectations for the future, and how financially you structure things.

Assuming no rent or mortgage, or any other loans, and no dependant financial constraints, kids college funds put away seperately, and a nice sized savings pot to cover any big ticket items like a new car, big holidays, i don’t see how say a couple (Granted different for a sole person)can live on 40 k a year between them on an ARF drawdown, very little tax, about 8.5 % on 40k for a couple, and the included 4%prsi stops at 65, which effectively halves the overall taxes being paid, so reduces to about 4.50 %.

Getting your ongoing bills down, is very important. Review everything.
if a couple, perhaps considering reducing to sharing one car, all this helps, make it a lot easier. You have to be realistic to make it work, and make some hard decisions, if so, its very doable.
 
With so much talk about landlords not being allowed to sell their property with vacant possession I wouldn't be in any rush to get into the rental market. I feel most tenants are good but you can always get someone who will not pay and it takes ages to evict them. A letting agency will take a percentage and there are other costs such as insurance, PRTB fees, LPT and maintenance . As Sarenco pointed out it is very important to have sufficient contributions for the State Pension. I would advise him to think seriously about retiring at 61 - if he has other interests and hobbies it might be fine but he may soon get bored .
 
Depending on the type of pension plan he has, he (and/or his employer) may be able to make a last-minute contribution to it before he retires, avail of full tax relief at his highest rate and then withdraw it all as a lump sum immediately after he retires, tax-free. This doesn't work in everyone's circumstances, but it's worth asking his broker to establish if it applies in his.

I would be reluctant to recommend that your father invests the bulk of his life savings in a single asset in a single asset class on a small island. If he's worked 40 years in construction, then my guess is that he would feel comfortable investing in something that he understands. But remind him that he's lived through several examples of how things can change dramatically in a short space of time, in ways that nobody really predicts. At one time, shares in the pillar Irish banks were considered to be literally as safe as houses. It was unthinkable that anything bad could happen to an investment in them. Until it did. More recently, look at the dramatic changes that have been brought about by Covid-19 and are still unfolding. When I was growing up, if anyone had suggested that owning a pub in a busy Irish town town would be anything but a thriving business for life, they'd have been laughed at. Now look. My point is that no single investment should be thought of as a suitable home for all of one's life savings, no matter how attractive that investment might seem now. Things can happen that you wouldn't think possible today. Split it up - diversify.
 
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LDFerguson said:
Depending on the type of pension plan he has, he (and/or his employer) may be able to make a last-minute contribution to it before he retires, avail of full tax relief at his highest rate and then withdraw it all as a lump sum immediately after he retires, tax-free. This doesn't work in everyone's circumstances, but it's worth asking his broker to establish if it applies in his.

I would be reluctant to recommend that your father invests the bulk of his life savings in a single asset in a single asset class on a small island. If he's worked 40 years in construction, then my guess is that he would feel comfortable investing in something that he understands. But remind him that he's lived through several examples of how things can change dramatically in a short space of time, in ways that nobody really predicts. At one time, shares in the pillar Irish banks were considered to be literally as safe as houses. It was unthinkable that anything bad could happen to an investment in them. Until it did. More recently, look at the dramatic changes that have been brought about by Covid-19 and are still unfolding. When I was growing up, if anyone had suggested that owning a pub in a busy Irish town town would be anything but a thriving business for life, they'd have been laughed at. Now look. My point is that no single investment should be thought of as a suitable home for all of one's life savings, no matter how attractive that investment might seem now. Things can happen that you wouldn't think possible today. Split it up - diversify.
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Thank you very much for the information it’s much appreciated
 
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