What to do Next? Wait for auto enrolment pensions?

gpjordanf1

Registered User
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12
Age: 46
Spouse’s/Partner's age: 42

Annual gross income from employment or profession: 51k
Annual gross income of spouse: 55k

Monthly take-home pay 5400

Type of employment: Private

In general are you:
Saving

Rough estimate of value of home 175K
Amount outstanding on your mortgage: 76k
What interest rate are you paying? 1.5% + ECB Tracker


Other borrowings – car loans/personal loans etc None

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments: 32k in State Bonds & 35k "College" funds for children

Do you have a pension scheme? No

Do you own any investment or other property? No

Ages of children: 11 & 7

Life insurance: Not sure what to call it? It pays out original Mortgage of 155K regardless of balance remaining. It also seems to be linked to a fund and that is currently
worth 7.5k?


I guess at my age I'm thinking of the future more and retirement, just wondering have I left it too late to start a pension?
Should I be aggressively targeting this now or just wait to see what auto enrollment will bring?
Anyone else in the same boat?

I did lose 10 years of earnings with the recession and had to retrain myself in a new sector and only getting back to 2008 earnings now
so last 10 years have been keeping head above water & paying the bills & saving for the children.
 
How much are you saving and what are your outgoings every month?
How long do you have left on your mortgage?
When are the State bonds due to mature?
Does your company not provide your partner or you with a pension?

I am not the best person to give you advice but as no one has posted yet, let us see if we can get a conversation going. This is how I view your current situation.

I would look at your savings and investments: 32k in State Bonds & 35k "College" funds for children. The State bonds, such as the 10-year National Solidarity bond, is a good low risk way to save money. Based on the two kids ages, I would want to be able to access that money in 10 years so if you have a very low risk tolerance I would stick that the childrens fund of €35,000 in a 10 year bond and let it sit there. Personally I do not have a low risk tolerance so I am more likely to invest the €35,000 into an accumulating EFT (Exchange traded Fund) and let it sit there for the 10 years. If you wanted to look more into that option I would create another post to ask questions and read the Investment section of this forum. Dont rush into that option.

The €32,000 in State bonds I would use it to pay a chunk off the mortgage and then combine it with your savings every month. The sooner you get your mortgage paid off the sooner you can redirect that money into a pension. As a back of the envelope (made up) calculation. If you have 10 years left on your mortgage and you paid off 32,000, your new mortgage monthly payment could be cut from €682 to €395 a month. If you then continued to pay your current mortgage of €682 (You are now overpaying) you could have your entire mortgage paid off in 3.5 years. (which sounds pretty good to me). If you combined that with what you are savings...that time could be reduced further. At this point you, and not the bank, will own your house.

After that I plough it all into a pension fund.
 
I guess at my age I'm thinking of the future more and retirement, just wondering have I left it too late to start a pension?
Should I be aggressively targeting this now or just wait to see what auto enrollment will bring?
Anyone else in the same boat?

I did lose 10 years of earnings with the recession and had to retrain myself in a new sector and only getting back to 2008 earnings now
so last 10 years have been keeping head above water & paying the bills & saving for the children.

I think starting your pensions should definitely make your new years resolutions. Clearly despite the setback you have managed to save money even through the bad times so take advantage of the tax breaks that pension savings represent. (€100 in your pension is cheaper than €100 to your after tax savings and it isn't hit by DIRT)

There is no particular value in waiting for auto-enrollment. All you would be doing is deferring starting another 1/2/3? years (I don't think anyone can give you a date just yet!).

The first question has to be, do your employers provide an occupational scheme? If they do, avail of it, it is probably the simplest way to get started and it would likely be cheaper than going the PRSA route.

The second question would be, do your employers match contributions? If they do, make sure you contribute at that as a minimum. So if they, for example match 5% contributions from you, make sure you contribute 5%. It is essentially a pay raise that is going straight into your pension pot.

Start with the matched contribution level, then start working up. In your 40s you get tax relief for contributions up to 25% of your salary. That doesn't include any employer contributions. So if your employer matched 5% and you contributed 25% you would actually have 30% of your gross salary being put into the pot. Obviously, that would be a shock to the system to go from 0 - 25% in one go since even with the tax break you would still see a reduction in your take home pay, but incrementally increasing the amount you pay in would be prudent.
 
The €32,000 in State bonds I would use it to pay a chunk off the mortgage and then combine it with your savings every month. The sooner you get your mortgage paid off the sooner you can redirect that money into a pension. As a back of the envelope (made up) calculation. If you have 10 years left on your mortgage and you paid off 32,000, your new mortgage monthly payment could be cut from €682 to €395 a month. If you then continued to pay your current mortgage of €682 (You are now overpaying) you could have your entire mortgage paid off in 3.5 years. (which sounds pretty good to me). If you combined that with what you are savings...that time could be reduced further. At this point you, and not the bank, will own your house.

After that I plough it all into a pension fund.
OP, you have a sizeable amount in savings but it isn't excessive, I am assuming the savings are a cushion built of experience and I don't think I would be inclined to redirect them all at your mortgage as suggested by Live Well. As it is a tracker at just 1.55% it isn't very expensive. You are trying to balance out the cost of money borrowed in the past with the return on money you have at the moment. If you wait the 3.5 years to start building your pension pot, you will be approaching 50, hence the reason I think getting your pension started should take priority over clearing down your mortgage, I think it would be better value in the long run. You could consider a blended strategy here, use some of your savings to pay a lump sum off your mortgage and then retain your current repayment level so that you are overpaying as suggested. You really need to sit down and work out what you want to prioritise.

You don't indicate what you are saving each month at present into your two ear-marked funds, your children are 11 & 7 so college education is a few years away yet, do you have a target amount for that fund or is it simply a case of make it as big as possible? It might be worth considering using part of that fund to pay down mortgage, and rebuilding it in the future. The eldest child is 6/7 years from college and the younger is 10/11 years, which also means that the overlap between the two of them in college is less. You have time in there to look at rebuilding that fund if you use some of it.
 
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Hi Guys
Thanks for the feedback.

Savings would be 500 - 650 combined, could probably get more but this level can be maintained.
The mortgage has 17 years left and is 409 p/m ( not too concerned about paying it off early as its a tracker )
State bonds mature in 3 years
Outgoings are standard, food, bills, utilities etc
No loans, credit card debt etc
Employer for both of us would be dragged over hot coals before providing a pension never mind contributing to it, I guess that why auto enrollment will at least force them into it.

I had hoped to build the 32k bonds into 100k, to build a small simple retirement home on land we own where we originate from ( obviously that figure would increase as years go by), and then use the rental income of our town house to supplement state pension if a private pension was impossible.

The college fund will build @ 200 p/m, so what ever that achieves in the time is the plan.

That's where were at, very comfortable lifestyle, cushioned by savings as mentioned, so the struggle to get them will mean a hard job in risking them.
 
Imagine!
Reached out to a few Brokers to contact me regarding Pensions / advice etc
Not one has contacted me................
There must be a boom or something?
 
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