Early Retirement at 57

SeanieRetrofitter

Retiring early (or on time with higher income for that matter) will always involve sacrificing some of your current salary for your future self.

Most people wouldn't think twice about committing to a 30 year mortgage in their 20s or early 30s to have the security of their own home rent-free later. Probably the majority would pay more for a better (whatever your personal definition of "better" happens to be) home.

So long term financial planning and salary sacrifice for retirement is actually totally normal. A pension plan is just another leg for the retirement stool...

SharkMX

https://www.boards.ie/discussion/comment/122009631#Comment_122009631

Im told I can access mine from 50 years old if I want.

bilbot79

Some interesting points made by KPMG on public consultation on SFT

Should be raised from 2m to 3.47m

Contributions limit should raise to 200k from 115k

Unused contributions should be allowed to carry forward

Private sector should be able to refund contributions against breach of SFT as apparently public sector can do that

I would say there is a good chance of movement on some of these due to inflation, rental society etc

https://kpmg.com/ie/en/home/insights/2024/02/pension-tax-reform-needed.html#:~:text=KPMG%20submission&text=The%20%E2%82%AC2m%20threshold%20has,real%20value%20of%20the%20SFT.

SeanieRetrofitter

https://www.boards.ie/discussion/comment/122022786#Comment_122022786

Allowing people to carry their contributions forward is a good idea- it incentivises lump sumpayments when people get windfalls.

Their justifications for increasing the SFT are.... weak.... Nobody with the financial cop on to accumulate 2 million plus in their pension fund is going to be dumb enough to then throw that money away on an annuity. They're also unlikely to be renting in their retirement....

bilbot79

I think raising the contributions limit is a good idea too. 115 today ain't what it used to be. Inflation in general is a good enough reason. Our govt is giving us sweet FA in terms of tax benefits compared to the UK so more tax free cash in the pension is welcome

reggie3434

Really great thread and interesting to hear the different outlooks, I can see my own dad doesn't want to sit still in retirement and still wants to keep involved in something work wise. That's his want and that's fine, me I would finish work tomorrow and potter quiet nicely, I've started by taking parental leave already and love the time off. It does limit the income but I'm not interested in fancy cars or clothes anymore, going to spend my money on my whoop watch, gym, golf and decent food and hop off that pension for many a year!!

Dohnjoe

https://www.boards.ie/discussion/comment/121998492#Comment_121998492

It's possible, via compounding. I've seen some insane results from the FIRE (Financial Independence, Retire Early) people. One guy hit double digit millions because he started it aggressively when he was 25. Future gains depend on risk profile, contributions, yadda, yadda, but it's very much a thing.

Wanderer78

https://www.boards.ie/discussion/2058345724/early-retirement-at-57

if you can afford it, and your finances are in order, dont think twice about this, go for it, you will not regret it, lifes away too short, unfortunately theres a good chance you wont be fit enough to do what you can do now, as you age, so go for it, and best of luck with it

elperello

https://www.boards.ie/discussion/comment/122025355#Comment_122025355

With the shortage of qualified reliable people in many sectors now is a good time for those looking to go part time.

I know a few for whom it worked out very well.

Once the stress of full time responsibility is removed the 15-20 hours a week can be very manageable and help with finances.

Nermal

https://www.boards.ie/discussion/comment/122022786#Comment_122022786

One of the contribution limit or SFT should be scrapped. Why do we need both of them?

SeanieRetrofitter

https://www.boards.ie/discussion/comment/122025446#Comment_122025446

No risk, no reward.

€10k- current value with inflation of €14k- in the nasdaq 100 on 1 January 2004 would have grown to €110k on 1 January 2024. And has an excellent chance of growing to €1.24 in 2044- assuming similar inflation levels, around €880k today. 8.8 times growth in 20 years in real terms.

1986 to 2006 would have been 7.1 times growth in real terms. That period included the dot com crash.

S&P figures are lower, but more stable. AAA bonds would be negative after inflation.

If i knew then what i knew now!

Jim2007

https://www.boards.ie/discussion/comment/122025446#Comment_122025446

FIRE and day trading have one thing in common - all those promoting it work very hard at selling you stuff - books, courses, data and services because that is the only way to make real money out of it. Yes it is possible to accumulate a tidy sum if you start early and compound at around 12.% pa but not with that FIRE fudge.

unhappyBB

https://www.boards.ie/discussion/comment/122019591#Comment_122019591

Yes, I can check out any time I want but I can never leave…
The AVCs were originally supposed to fill in the years between when I left the company and when I officially retired and started drawing down from their DB scheme. There was a whole leave, transfer AVC to a pension bond, move to another company, retire on the transferred value plan given to me by the adviser. The next year, when I asked to clarify how exactly it was to be done I was told none of it was actually allowed by the rules of the pension scheme and both DC and DB elements were tied together.

I worked out actual values and couldn't believe it. Because the DB schemes payout includes the state pension, and the reductions are so severe, the DB payout is crazy low until I'm 68. €8,700 annual pension @60. My AVCs are obviously DC but they seem like a much better deal. They cost more than double to fund though and I don't know if I can keep it funded at this level forever, and I have some optimistic growth forecasting done on it.
Looks like I'll be rethinking the whole early retirement thing.

SeanieRetrofitter

https://www.boards.ie/discussion/comment/122025797#Comment_122025797

To be fair, the FIRE stuff is mostly common sense- pay off high interest debt, invest in index fund & over pay mortgage. And a debt free homeowner has vastly more options than the person paying half their salary on mortgage, car loan etc.

It's not that the influencers selling these concepts are wrong- It's more that if you can't grasp the idea in a 3 minute Instagram video, whatever they're selling you isn't really going to help. And if you do grasp it, the course etc is still a waste of time and money.

Day trading is an excellent way to lose money. Even for professionals, vanishingly few traders can beat the market long term.

bilbot79

https://www.boards.ie/discussion/comment/122025779#Comment_122025779

I presume these limits were pushed down under the watchful eyes of the troika. I guess limiting the contribution limit creates a bit of trickle down and tax revenue from the greedy scrooge mcducks. I always spend the bit of my bonus that pushes me over in the real economy but I wouldn't if I could get the tax benefit.

I guess the SFT is just the taxman reining it in. They reduced it in the UK to 1073000 but then recently scrapped it altogether. We should probably do the same but I would have Ireland ditch the deemed disposal and start ISAs sooner than increase the SFT

SharkMX

I know someone from Dublin who retired early. Had his pension and investments all set up.

When he retired he moved up to Northern Ireland - i think he had to be there a certain amount of years first before he could take money from his investments. He got better tax treatment on his investments and in general was far better off financially living off his pension and invested money than he would have been if he was tax resident south of the border.

Ive heard of people doing the same in Spain or Portugal too, but i dont know anyone who did it myself.