Would love to retire in 40’s

[wanttoretire]

Personal details:

Aged 37
Spouse 39
3 children (1,3,5)

Income and expenditure:

Me: PAYE €125k
Him: €65k sole trader
Rent a room: €13.5k

We save the following monthly:
€750 cash
€1k into an investment fund
€750 into 3x bare funds for kids
€1k into my share option scheme in work
Also annually put part of bonus into APPS (approx 12k annually which remains for 3 years).

Summary of assets and liabilities:

Home house worth approx €900k.( we were lucky to buy very ‘cheap’ and do up to have a house worth this)
Mortgage of €350k
Therefore equity of about €550k

Investment bond: €86k
Investment fund paying into monthly: €36k
Bare funds: €20k
Company shares (my company has done very well over last 3 years): €150k
Crypto: €12k
Cash: €75k - plans for this as discussed below
Mortgage: €1900 pm, 22.5 years left.

Other borrowings:
No other loans and pay off credit card monthly

Pension:
Mine is valued at €150k currently- I max out AVC’s annually. Company pay 10%
Husbands valued at €60k.

Specific questions:

As the title suggests, I would like to retire in mid 40’s and be more at home with the kids as they get older.
my husband has no interest in retiring early so we will still have his income plus the rent a room (granny flat income).

We currently invest a lot (global equity funds and top tech fund which tracks Nasdaq). Plus my company shares. I plan to start selling part of my company shares from this year and re-invest into more diversified funds whilst also taking advantage of the tax advantages by still continuing to invest monthly into my company shares ( I hope that makes sense). Hoping that these investments should see me through from time of retirement until the time my pension kicks in.

I hope by continuing to max out my pension until I retire that it will then continue to compound and possibly reach the €2m limit before I start drawing it down (invested in a global equity fund with average returns of approx. 11% P.A.)

We plan to take out an investor mortgage in the coming months and use the cash we have saved to buy our first BTL (hopefully a 2 bed terrace for about the 250-270k range). Ideally would like to purchase 3 investor properties before I ‘retire’. Given my husbands skill set, hopeful of purchasing a doer upper that he can work on. Not looking for an income from these BTL’s as such but more so to use the leverage to have an extra pension pot in our 60’s.

Given the changes in PRSA rules, would it make sense for my husband to hire me and pay me a small salary and lump some money into a PRSA for me to allow that money compound tax free? I do currently help for free with admin, accounts etc.
Also, would people suggest he put more money into his PRSA than he would actually get income tax relief for?

I guess, I’m just looking to see if people can see anything obvious that we should/shouldnt be doing.

TIA

 

[_OkGo_]

I would like to retire in mid 40’s and be more at home with the kids as they get older.

So before jumping into the financials, I would say that this is your answer to a very stressful lifestyle right now. 3 young kids and a high paying job is no walk in the park. Instead of killing yourself for the next 10 years just to retire completely, you should really consider whether this is the job for you and what other options you have.

You can take unpaid parental leave (26kws x 3 kids), you could find a more manageable lower paid job that gives you flexibility etc

Company shares (my company has done very well over last 3 years): €150k

This is madness. For an ESPP scheme, you should execute same day sale and for APSS you should be selling immediately on the 3 year mark to get the IT benefit but you shouldn't be taking further risk. It's very easy to be fooled by the "they've been doing great" but it is massive exposure to risk for you. You probably have a big CGT bill currently on these so you should be selling asap and only hold the required amount for APSS

I hope by continuing to max out my pension until I retire that it will then continue to compound and possibly reach the €2m limit before I start drawing it down (invested in a global equity fund with average returns of approx. 11% P.A.)

Past performance is no indicator of future performance etc etc. It's great that it has done well and most on AAM are similarly invested in global equities within their pensions but personally I think planning for 11% growth is ambitious. You also need to factor in inflation as a €2m fund today is worth more than a €2m fund in 20 years. It's worth doing the projections with more than just the best case scenario. For example, if over the next 10 years of contributions the fund only returns 6% and inflation is running a bit high at 3% then you are in effect only getting 3% real growth. It might change your opinion on how early you can retire

You have PPR debt of €350k and you have cash/shares/investments of €359k excluding the bare trust as this is no longer yours. Probably a bit less when you factor in CGT on your shares/crypto. You are currently in a really healthy financial position

However, you want to (say in the next 5 years) buy 3 BTLs worth ~€800k. This means using €240k cash as a deposit and probably €60k between everything else (solicitors, engineers, furnishing etc). You would be wiping out most of your cash reserves, still have a €300k+ PPR mortgage and you want to add €500k BTL mortgages at 5.5-7.5%.

Personally I think this is extremely risky considering you want to retire in your 40's. As soon as you buy your first BTL, your current rate of savings will change because you are now servicing 2 loans and it will be cashflow negative (but probably slightly profitable). You are giving yourself a massive financial commitment by doing this. If either you or your husband lost a job you would be under serious presssure with that level of debt.

Not that I am recommending it but if you do anything with BTL's, you should buy the first outright with cash and at the same time start paying down your PPR significantly. Leverage should not be part of the equation.

would it make sense for my husband to hire me and pay me a small salary and lump some money into a PRSA

Unless you get very good professional advice to do something like this then you shouldn't be doing it. Otherwise it will just look like bogus employment.

 

[Blackrock1]

Pensions look very light, why all the investments outside of the pension wrapper? But in response to the qn, if you can do it, take the time, my wife did the same and it has been brilliant, kids have thrived and everyone is happier, money isnt everything!

 

[wanttoretire]

Pensions look very light, why all the investments outside of the pension wrapper? But in response to the qn, if you can do it, take the time, my wife did the same and it has been brilliant, kids have thrived and everyone is happier, money isnt everything!

We are both maxing out our pensions so that is why they are only at the amounts they are for now. My husband only set his up about 4/5 years ago. Would you suggest we ‘overpay’ into our pensions rather than continue to put into normal non-pension investment plan?

 

[Annieindublin]

Could you consider a career break of say 5 years now rather than going cold turkey when the kids get even more expensive?

 

[Premos]

If you want to retire to spend time with your children in 10 years, I think it's too late. What I mean is your eldest will be 15. By that age, they do become more independent and start not actually wanting to be around you all the time... If you want to slow down and have more time with them, I would encourage you to explore solutions for the next 10 years more than after. I have been a stay at home mum with a part-time job. My youngest is 14 and I am considering what I should be doing now. I don't want to retire at this stage, I want to see what else I could do!

 

[Annieindublin]

If you could negotiate term time working, or even just July and august, that would be helpful in reducing childcare for teens, as well as for now. 12 year olds are harder to entertain in the summer holidays but during term are in school until 4.

 

[dublinbay24]

I don't think you need to get into the BTL game to achieve your financial objectives. If anything they would probably detract from it.

Typically as you move closer to retirement age your pension should divest from equities into cash / bonds to reduce the risk, assuming 11% growth is to aggressive.

You are already heavily invested in Equities in your pension so you don't need to be outside of it. For example if you liquidate your investments and pay off your mortgage, you could save the 1,900 mortgage payment a month over the next 8 years (retirment at 45) which would equate to ~185k Euros without any return.

Separately you say you are saving 5k per month + 1900 pension = 6900, that seems like a lot of your take home pay with 3 kids (no childcare?)

 

[wanttoretire]

So before jumping into the financials, I would say that this is your answer to a very stressful lifestyle right now. 3 young kids and a high paying job is no walk in the park. Instead of killing yourself for the next 10 years just to retire completely, you should really consider whether this is the job for you and what other options you have.

You can take unpaid parental leave (26kws x 3 kids), you could find a more manageable lower paid job that gives you flexibility etc


This is madness. For an ESPP scheme, you should execute same day sale and for APSS you should be selling immediately on the 3 year mark to get the IT benefit but you shouldn't be taking further risk. It's very easy to be fooled by the "they've been doing great" but it is massive exposure to risk for you. You probably have a big CGT bill currently on these so you should be selling asap and only hold the required amount for APSS


Past performance is no indicator of future performance etc etc. It's great that it has done well and most on AAM are similarly invested in global equities within their pensions but personally I think planning for 11% growth is ambitious. You also need to factor in inflation as a €2m fund today is worth more than a €2m fund in 20 years. It's worth doing the projections with more than just the best case scenario. For example, if over the next 10 years of contributions the fund only returns 6% and inflation is running a bit high at 3% then you are in effect only getting 3% real growth. It might change your opinion on how early you can retire

You have PPR debt of €350k and you have cash/shares/investments of €359k excluding the bare trust as this is no longer yours. Probably a bit less when you factor in CGT on your shares/crypto. You are currently in a really healthy financial position

However, you want to (say in the next 5 years) buy 3 BTLs worth ~€800k. This means using €240k cash as a deposit and probably €60k between everything else (solicitors, engineers, furnishing etc). You would be wiping out most of your cash reserves, still have a €300k+ PPR mortgage and you want to add €500k BTL mortgages at 5.5-7.5%.

Personally I think this is extremely risky considering you want to retire in your 40's. As soon as you buy your first BTL, your current rate of savings will change because you are now servicing 2 loans and it will be cashflow negative (but probably slightly profitable). You are giving yourself a massive financial commitment by doing this. If either you or your husband lost a job you would be under serious presssure with that level of debt.

Not that I am recommending it but if you do anything with BTL's, you should buy the first outright with cash and at the same time start paying down your PPR significantly. Leverage should not be part of the equation.


Unless you get very good professional advice to do

Thank you for the replies

To be fair, I do at least 10 hours a month and more some months of admin, bookkeeping etc. and do his accounts at year end. Surely them hours must be worth something?



I 100% get what you are saying re. The company shares. I cashed out all of it 2.5 years ago so this pot has built up very quickly, I plan to cash out each year as they vest plus will take the ESOP out this December. Company only allows to cash out once per year! I knew some information that would more than likely result in a strong performance for the company this past year (which it did) which is why I didn’t cash out any last year.



I guess the risk of both of us loosing our jobs is quite unlikely so we are not too worried about the excess debt. God forbid something was to happen my husband after I had ‘retired early’ - I could always just go back into the workforce. I mean I will probably technically class it as a career break for a couple of years anyway to see if it really is something I actually like. I don’t think if I leave my job at 45 that means there is no way back if I really needed to work again. Maybe I am wrong to think this.



Also, without giving too much information, we could easily sell our PPR currently for €900k-€1m and buy a similar size house which we could live in comfortably for about €500k in the same town. (Detached with large garden vs. An estate). Again, another option if we were to find ourselves badly strapped for cash.


The BTL’s are my partners dream, so I don’t think there is any persuading him differently.



You have me all thinking about my kids now versus teenagers. And I think I may try and use my parental leave to take summers off going forward (if my employer agrees).

 

[Dr Strangelove]

As the title suggests, I would like to retire in mid 40’s and be more at home with the kids as they get older.
my husband has no interest in retiring early so we will still have his income plus the rent a room (granny flat income).

I think you have this upside down.

Kids will need most attention now and for the next ten years or so. When they’re in their teens they won’t want to know you!

It makes more sense to take time out now and return to the workforce in your mid-40s. This is more or less what we did in our household and no regrets.

 

[Annieindublin]

Depending on work if you can negotiate terms time or summers off for a few years then establish a working pattern that suits everyone it can be very useful when you have 15 year olds with 3 months off school. Being around to hang with them builds great relationships in my experience. Also you get to meet their friends and see what they are up to

 

[Gordon Gekko]

Difficult to see how you can both fund for retirement if you step back based on your husband’s very modest income.

 

[_OkGo_]

Me: PAYE €125k
Him: €65k sole trader
Rent a room: €13.5k

After both maxing your pensions, you should have ~€100k in net income. With child benefit (€5k) and the rent a room (€13.5k). So give or take a little for other things like health insurance, broadly speaking you have €9.8k net income per month.

You already have €3.5k in regular savings (possibly more depending on whther your bonus is included in your salary figure) and you have €1900 in mortgage commitments.

That leaves you with €5.4k for everything else but there are probably other significant commitments like childcare to be considered.

The great thing with your current setup is the €3.5k in savings is not a commitment, it is a choice. If you need €3k next month for car repairs, you can pay for it from income without going near savings.

If you commit to all 3 BTL's, you would most likely have total BTL mortgage commitment of €3-3.5k per month as well as having used up all of your current cash/investment buffer. Yes you will have rental income but there will be voids, repairs, unforeseen events that mean you have to pay the mortgages and may not have the rental income to cover it. It puts you in a high risk

I guess the risk of both of us loosing our jobs is quite unlikely so we are not too worried about the excess debt.

It's not about both of you loosing a job. Your whole plan hinges on you having a very high salary. If either of you (particularly you) were to lose your job temporarily and be out of work for a few months, you would be a serious risk of missing mortgage payments and going into arrears if you had a PPR and 3 BTL mortgages.

To be fair, I do at least 10 hours a month and more some months of admin, bookkeeping etc. and do his accounts at year end. Surely them hours must be worth something?

I'm not doubting that you do this work but it is basic admin work (€15-18/hr) and you do 10 hours of it per month. It's not comparable to your current salary and it would not justify a big pension. It wouldn't be justified that someone earning €2k/yr would have much if anything in a pension in this arrangement. The best you could hope for here is to use up some of your tax credits to lower your joint assessment income tax. I don't think pension should be part of it

Again not that I would recommend it but if you are set on being a landlord then start with 1 property and purchase it outright from your current cash pile. The income from this would offset most of your lost income if you start using your parental leave for 1/2 months per year. And in the meantime, focus everything else on clearing your PPR mortgage.

In 5/6 years time, if you are mortgage free on your PPR and a BTL you would be in a great position to take a big step back or few years off. You would have your husbands income, rental income and rent a room income.

 

[Bronte]

I would like to retire in mid 40’s and be more at home with the kids as they get older.I guess, I’m just looking to see if people can see anything obvious that we should/shouldnt be doing.

Is this a wistful dream or is it a nightmare. The biggest flaw in it is that the children will be 9/11/13. The time they start becoming independent and not wanting to be anywhere near you.

If you think it's easy to take a career break at age 45 and go back into the workforce at age 50 or 55 you are delusional. Now is the time to make the money. You have not said it, but I assume there is a lot of stress on you in a high powered job with 3 very young children. Are you using the high income to work for you to have a more time with the children. (housekeeper, meals out, ironing service etc). As you specifically mentioned time with them, I'd be looking for longer term time leave in your job, or maybe a 4 day week, on 4 days or 3 days and 2 half days.

This is a love it or loath it scenario for a mother/family. Would you be content being fully at home, with no regular income. Right now do you have time for you. To go clothes shopping, a coffee, the hairdresser. Have you the time to think for yourself, because having been there done that, with young children it's something us mothers often lose sight of.

On the financials, you might very much regret giving away a well paying job. Only you know this. And is your husband happy about it. Because a family unit must consider everybody.

BTL's.

Only buy those, mortgaged, if you've done the sums, and if there is no possibility that in a recession, property crash, loss of job affects those properties if they pay for themselves. Our BTL's were always bought, mortgaged, so that if the worst happened, that those could not be taken by the bank because the income coming in was always enough to cover voids, damage, crashes etc. Can you do up one BTL's figures for yourself to see if this works. The fact your husband wants to do 'doer uppers' is a good way to make money. (Currently watching Sarah Beanie's property programme to get myself in the vibe with my eldest child) I'm going back into the market that way as we cashed out due to the RPZ rules. Always nice to have a side line, excellent on the granny flat and other rental income, keeps your income streams going.