What should I do for the next few years before retirement?

[Annieindublin]

Age:62
Spouse’s age:60

Number and age of children: adults not living with us

Income and expenditure
Annual gross income from employment or profession: approx €100k
Annual gross income of spouse: €105k

Monthly take-home pay Approx €7,300 combined

Type of employment: Both private

In general are you:
(a) spending more than you earn, or
(b) saving? Saving approx 3,500. But we like holidays so savings aren’t growing as much as they could if we put our minds to it,


Summary of Assets and Liabilities
Family home worth €750k, no mortgage
Cash of €60k


Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? yes
If not, what is the balance on your credit card? 0
Car loan with CU about €8 k and balance of €15k in CU shares.


Other savings and investments:

Do you have a pension scheme?
yes, paying max and 20k pa or so to AVCS as well

Hubby maxing his too but late starter

Defined Contribution pension fund:
I have 3 DC schemes
2 old Uk K policies with £110k between them, projected income between them is approx £9k pa. These have been sitting there for decades from back when I was told it was a good idea to put money aside… and fortunately I maintained contact with them. Part of the old opting out mis selling scandal in UK.
ROI AVC schemes fund value €167k projected income about €10k pa currently.

Defined benefit
I’m in a DB scene with pay at retirement date of €34k pa if I retired now that would be €29k it is not payable until I turn 65.

Hubby contributes the max to his scheme now but only started about 5 years ago. (New job and uplift in income, before that he was self employed and didn’t contribute to anything)

Other relevant information
We both worked in UK for years and have applied for and paid up all the back payment and are both on target for about 11k each there.

We know hubby should continue to maximise his DC contributions.

What else should we be doing to provide for retirement or enable him to retire a year or so early.


What other information is relevant?

 

[ClubMan]

Annual gross income of spouse: €105

Did you mean €105K?

Defined benefit
I’m in a DB scene with pay at retirement date of €34k pm, if I retired now that would be €29k it is not payable until I turn 65.

Did you mean €34K/€29K per annum rather than per month?

Cash of €60k

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? yes
If not, what is the balance on your credit card? 0
Car loan with CU about €8 k and balance of €15k in CU shares.

Why don't you clear the car loan and avoid paying interest unnecessarily?

 

[conor_mc]

So just to summarise, at retirement age you would have a DB of €29-34k pa, plus two UK pensions of GBP11.5k, plus whatever you are each entitled to from the Irish COAP? Have you checked on welfare.ie where you each stand re credits / expected pensions here in Ireland? Will your DB continue to pay out a certain percentage to your spouse after your demise? You're pretty well set there from 65 onwards given your current rate of expenditure (less discretionary holiday spending).

In addition to guaranteed pensions above, you also have €132k/£110k in UK pensions - are you obliged to take these as annuities or can you transfer them into an ARF-like wrapper to give you more flexibility? You also have 60k cash plus €167k AVC plus you didn't mention where your spouse's 5 years of AVC's have grown to but presumably it's in the order of (5 years at 35% of 105k salary plus growth) so north of €200k? If so, that would seem to be enough to bridge you from early 60's to 65/66 at your current rate of expenditure, depending on your holiday funding needs.

 

[Annieindublin]

Corrected the errors.

My DB pension pays a reduced amount to a widower.

I think I can take the UK money out but I’m not sure of the tax implications of doing that.

Husband has about 180k, he is to dig out the figures.

I need to check with welfare about our state pensions. I’ve been working here for c 30 years plus another 5 post uni before I moved to UK but husband was self employed when we moved here so I don’t what he is entitled to. He completed tax returns, didn’t pay a lot of tax most years but always paid NI of course.

 

[Annieindublin]

We probably should clear the car loan, we were vaguely planning some house renovations which we have decided against so I wanted to keep the cash available.

We do need to renovate 2 bathrooms though so that will absorb a fair chunk of change.

 

[conor_mc]

1) Clear the car loan
2) Establish what Irish COAP you are each entitled to by signing up for MyGovID's and checking on MyWelfare.ie
3) Draw up a retirement budget (at current prices) - we can get an indication from your current spending profile, but your holiday spend, etc is a question mark, as well as the impact of any other lifestyle changes in retirement (e.g. higher home heating bills, lower discretionary spending on coffees/lunches at work, for example).

But on the whole, it looks to me like you guys could retire today if you wanted to, using your various funds to bridge until fixed income's kick in at 65/66. But you may be happy to continue working for another few years to cover any upcoming large expenses like bathroom renovations, to increase your holiday funding, etc.

Well done!

 

[Benbulben]

Well done Annie! You are in great shape.

I'd clear the CU loan with your CU shares and keep the cash on hand for your renovations etc.

I take it that your AVC are tied to your current employment ? When you say its worth circa 10k per annum do you mean you want to buy an annuity with it ? Or will you put it into an ARF ?

As others have mentioned look at any large cost items now and have them paid off before you retire e.g. renovations
new car
solar panels
improvements to house insulation/windows etc.

You look to be doing everything right, keep on going the way you are.

 

[Buddyboy]

(b) saving? Saving approx 3,500. But we like holidays so savings aren’t growing as much as they could if we put our minds to it

Just something that jumped out at me. Why would you want your savings to be growing to the detriment of having great holidays, when you are in your sixties? It's that mindset (not saying that you have it), that sees people dying with loads of money in the bank, and not having lived.

Certainly there's a balance, but to me, I'd rather be having the holidays rather than increasing my savings, when it looks like the pensions are OK.

 

[Annieindublin]

I watched my parents save and wait for holidays then get feeble and unable to travel so we are doing what we can when we can.

We downsized to an apartment a couple of years ago partly to minimise renovations as our house needed updating and repairs.we have 2 dubious bathrooms though.

I will do that budget too. Good idea. We don’t scrimp now and be interesting to see it written out.

I haven’t worked out what to do with the AVCs, the €10k is an estimate from them. I’m not sure how accurate that is.

Check in up on state pensions.