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Capital sum required to retire
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If the OP retires in his 40s, he may not have enough social insurance contributions to qualify for the contributory pension, and of course the non-contributory pension is means-tested; on the figures we’ve been looking at he wouldn’t get that either. And some of the other benefits are tied to being in receipt of the pension.
(Plus, if you’re looking at retirement in your 40s, you should not bank on the structure of older-age pensions and benefits provided in 30 years time being the same as it is now.)0 -
Yeah, but what's left after taxes?
Depends on what his circumstances are and what country he is living in and what other income he has.
For example in Ireland you pay income tax on all your dividends and capital gains on any sales profit above €1270
However in the UK he would get £5k tax free dividends and then pay income tax.
And would get £11.3k capital gains tax free and then pay tax.0 -
Just giving some additional info that has been speculated upon...
- I DO have a mortgage and it has quite a good few years to run. However, whilst I have very little equity in it, the mortgage is small - 400 euro/month. I have ecb plus 0.52% tracker - probably the cheapest finance i will see in my lifetime. Its out in a regional backwater but rental is such that it should wash its face if I rent it out -so I'll keep it. Either a close family member will manage it for me or it may be that a family member will live there.
- I take the point about social benefits, etc. It's too long down the road...perhaps I will return to Ireland - but the plan right now is to live overseas in a developing country at low cost. Both my wants/needs, the situation abroad in terms of costs, situation in Ireland with regard to costs and benefits may change in the long term...so i guess i'll have to review that as I go.
I have 15 years of pension contributions together with having put in 9% AVC's. However, when I look at the yearly statement ref. my pension and what it would be worth if I continued to pay into it until state retirement age, it makes for depressing reading. I guess if I'm still in a developing country at that point, I may get more mileage out of it. That said, can I cash it all in now - and would it be prudent to do so??
- Whilst I'm looking to 'retire' early, Im still pretty young. I'm planning on going somewhere that may not be awash with jobs(!). However, I believe that there are always opportunities that pop up. With that -it's plausible that i may re-enter the workforce...whether self employed or otherwise - but it remains to be seen at what point and what the value of that 'work' will be.
Thanks all for the input on this thread - it's been really helpful. Planning on making a move in the next few months. Once I have time on my hands, i'm going to focus purely on examining all the options in terms of managing my savings to best advantage -so as to finance my lifestyle.0 -
Op, I don't know how true this is, but I was told a while ago by someone who lived in Spain for a few years that you can transfer social welfare to any country in Europe. You get paid what you would get paid in Ireland.
So say you lived in Spain but we're on the dole/pension here before you left, then you transfer your Irish dole/pension over there and get what you would have got here.
Also you are entitled to the same medical care as.tou would be entitled.to in Ireland too.
I don't know how accurate that is but worth checking out if you are moving abroad.0 -
@KelllyXX: Thanks for your post. I'd imagine that's true for a contributory pension - but I doubt it's true for a non-contributory? With regard to the dole, I remember there was a scheme whereby either you could transfer it for 3 months (or welfare here continued to pay it for three months) - but that was as far as it went. You were on your own after that. Perhaps they changed it since then but I doubt it. Surely the likes of Poland would be full of guys living at home on the irish dole (and yes, I understand that in the case of the childrens allowance, this is possible - just before someone brings it up ;-) ).
In any event, current plans are to move beyond the EU. Of course, I may move again - but just working on current plans right now.
In terms of investment though, what would people do with a 15 year old contributory pension? I'm not sure if it's possible to take it all out - but I'd imagine it's possible to take the bulk of it out. Should I leave it where it is OR should I take it out and add those funds to my pool of funds for investment - to be invested/managed myself??0 -
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makeorbrake wrote: »@KelllyXX: Thanks for your post. I'd imagine that's true for a contributory pension - but I doubt it's true for a non-contributory? With regard to the dole, I remember there was a scheme whereby either you could transfer it for 3 months (or welfare here continued to pay it for three months) - but that was as far as it went. You were on your own after that. Perhaps they changed it since then but I doubt it. Surely the likes of Poland would be full of guys living at home on the irish dole (and yes, I understand that in the case of the childrens allowance, this is possible - just before someone brings it up ;-) ).
In any event, current plans are to move beyond the EU. Of course, I may move again - but just working on current plans right now.
In terms of investment though, what would people do with a 15 year old contributory pension? I'm not sure if it's possible to take it all out - but I'd imagine it's possible to take the bulk of it out. Should I leave it where it is OR should I take it out and add those funds to my pool of funds for investment - to be invested/managed myself??
What country are you looking to move to?
60k a year let’s say 40k a year after taxes is a nice figure in Ireland to be living off with no expenses apart from living expenses but in a much cheaper country such as Thailand, Costa Rica, Eastern Europe etc its a very nice living standard, a lot better than what you sound like you in at the moment. If you are living in another country there is a good chance you won’t have a vehicle even to pay for so your talking rent as the main expense and then international health insurance and after that it’s gravy.
Many factors to consider and given the information you have provided, not much, only you can decide what’s the best path.
I’m on a similar path but looking to retire younger than you. There are a few things that need to unfold before I will do it. I won’t pull up stumps early and realise five years down the track I need to Go back into the workforce because I don’t have enough money. It’s always possible that I will have to do that but have to give myself the best chance now that I won’t have to do it.
My strategy is to not have to eat into any capital when retired if possible. I feel being very conservative is the best action to take. I take 3-4% as a return figure on that capital, I’m at about 30% this year but the market is being kind at the moment. So let’s say I have 1M. The return im looking for is 4%. That gives me 40k, let’s exclude taxes. Depending on the country you move to and the type of income you will look for it could well be tax free anyway. I would look to spend 20k of that 40k and either reinvest the other 20k or more likely I would put it into a very low risk investment, maybe term deposit or bonds. When the market tanks, which it will, you don’t have to be forced to sell when you don’t want to because you have that buffer there. I would also put aside if possible a 3-5 year buffer from the start as living expenses to ensure you are not a forced seller.
4% should be easily achievable. You can get that fairly easily on property. If you dumped your 1.2m on a well picked multi - family property in Dublin you should get around 6% return after expenses.
That will give you 72K per annum income gross.
Pick it well and it will be untenanted very little but the returns may fluctuate depending on the economy. It should give 3-4% worst case scenario.
I’m not really sure what else to say with the information you have provided but it sounds like you need to educate yourself better before you make the move, you seem to be rushing it without really knowing where your future income will come from.0 -
My parents sold their house and paid of the 40k remaining on the mortgage.
The rest, about 300k, they set aside 10 X 20k money which they say will easily last them the 10 years they had hoped and more.
And they invested the rest.
Then they both have contributory pensions which they haven't even had to draw down on yet. I don't think they are old enough yet anyway to draw them.
They are living the life as far as I can see and even my aunt now is talking about doing the same thing.
Fair play to anyone who does it.
Wouldn't mind retiring in my 50a lls myself. All this talk of.oncreasing retirement age is depressing. Obviously people with easy jobs trying to make decisions for those with hard jobs.0 -
Where do they live now?0
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I will take up residency in Panama (hopefully!) first week in February. The visa will take a couple of months - but effectively I will be in-country and residing there from the point of entry.What country are you looking to move to?
Panama is relatively low cost (so long as I move away from Panama City. I mentioned 60k - as I wanted to allow for inflation - but I would imagine that I can exist on much lower than this. I would be new to conventional investing - but I will have time on my hands initially (and a couple of friends with years of experience with same....so once everything is sorted residency wise - that will be my next priority - to have a balanced portfolio that will put my money to work - and for me to spend the time to research the art of investing...and take control over what I'm doing.60k a year let’s say 40k a year after taxes is a nice figure in Ireland to be living off with no expenses apart from living expenses but in a much cheaper country such as Thailand, Costa Rica, Eastern Europe etc its a very nice living standard, a lot better than what you sound like you in at the moment. If you are living in another country there is a good chance you won’t have a vehicle even to pay for so your talking rent as the main expense and then international health insurance and after that it’s gravy.
Now, it could also be that I don't end up staying in Panama. If I see a country where my money goes further, I may well up sticks down the road and relocate once more. I don't have any ties - I am agile and can move pragmatically - if needs be (I've not done in-depth investigation of this yet but I'm confident there are lower cost jurisdictions still). At the moment, tax is the motivation ref. Panama.
Yup, can't argue with that. I have one extremely urgent issue to resolve first and after that, I will have time on my hands to figure out what works best after that (with regard to location, etc.). ...but priority remains with setting up shop in Panama for right now - as soon as I can bring it about. Otherwise, if things run against me, I could end up on my ass (the asset class I want to cash in is highly volatile - so it's risky...can't deleverage myself from that position fast enough.Many factors to consider and given the information you have provided, not much, only you can decide what’s the best path.
I believe you're thinking along the right track. I am aiming for that. However, it remains to be seen until the day I realise my paperwork worth (which changes hour by hour at the moment) as to what sum I end up with. That said, I'm still young - there's life in the old dog yet - and after a short period of consolidation/chilling out, I would imagine I will be looking for an opportunity to create a little bit of extra wealth (may not need to be anything fancy - just something that brings some cash in to suplement my savings/mean that I don't draw down on the nest-egg).I won’t pull up stumps early and realise five years down the track I need to Go back into the workforce because I don’t have enough money. It’s always possible that I will have to do that but have to give myself the best chance now that I won’t have to do it.
AS above - we're on the same page.My strategy is to not have to eat into any capital when retired if possible. I feel being very conservative is the best action to take.
Savvy advice for sure.I would also put aside if possible a 3-5 year buffer from the start as living expenses to ensure you are not a forced seller.
You're absolutely right - I am rushing it - and whilst I'm not comfortable with that, purely by accident, all my asset class is in one item - which is extremely volatile. If that bombs over the next 45 days, I end up on my ass. I have to resign myself to that eventuality. However, I have an insurance policy in that if that happens, I will spend a year travelling - enjoy it - and (reluctantly!!) go back to the job in Ireland that I absolutely hate (in fairness to them, they have just introduced a 1 year career break - and so I can return if I find at time of cash out - that the asset I've invested in implodes).you seem to be rushing it without really knowing where your future income will come from.
Once I have realised that gain, I will have time on my hands. I intend to get myself up to speed very fast in terms of traditional investing - with a balanced portfolio that hopefully I can structure to achieve a reasonable gain. I am not averse to allocating funds to property (on the basis that I would rent out rooms or apartments but will NOT make a kneejerk descision on that until I am in-country - and know the lay of the land. I need to have a true appreciation for the value of property there (got caught in the past in Ireland on that in the Celtic Tiger years! ...not going to happen again!).
@KellyXX: My pension will probably end up being miniscule - so I'm being conservative and not even working that in to the equation right now.
It's being done more and more often now. It depends on your personal circumstances. If you have family, then it's a difficulty. I'm on my lonesome - and I relish the chance to live somewhere new - so it's a no-brainer for me.KellyXX wrote:Wouldn't mind retiring in my 50a lls myself. All this talk of.oncreasing retirement age is depressing. Obviously people with easy jobs trying to make decisions for those with hard jobs.0 -
With no debt and no rent, €60k a year (before tax) would be a lot. Someone could have a fantastic retirement with an income like that.
Having said that, we’re aiming for a lot more with a view to being able to help out the next generation if needs be and to be in a position to travel a hell of a lot.0 -
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makeorbrake wrote: »I will take up residency in Panama (hopefully!) first week in February. The visa will take a couple of months - but effectively I will be in-country and residing there from the point of entry.
Panama is relatively low cost (so long as I move away from Panama City. I mentioned 60k - as I wanted to allow for inflation - but I would imagine that I can exist on much lower than this. I would be new to conventional investing - but I will have time on my hands initially (and a couple of friends with years of experience with same....so once everything is sorted residency wise - that will be my next priority - to have a balanced portfolio that will put my money to work - and for me to spend the time to research the art of investing...and take control over what I'm doing.
Now, it could also be that I don't end up staying in Panama. If I see a country where my money goes further, I may well up sticks down the road and relocate once more. I don't have any ties - I am agile and can move pragmatically - if needs be (I've not done in-depth investigation of this yet but I'm confident there are lower cost jurisdictions still). At the moment, tax is the motivation ref. Panama.
Yup, can't argue with that. I have one extremely urgent issue to resolve first and after that, I will have time on my hands to figure out what works best after that (with regard to location, etc.). ...but priority remains with setting up shop in Panama for right now - as soon as I can bring it about. Otherwise, if things run against me, I could end up on my ass (the asset class I want to cash in is highly volatile - so it's risky...can't deleverage myself from that position fast enough.
I believe you're thinking along the right track. I am aiming for that. However, it remains to be seen until the day I realise my paperwork worth (which changes hour by hour at the moment) as to what sum I end up with. That said, I'm still young - there's life in the old dog yet - and after a short period of consolidation/chilling out, I would imagine I will be looking for an opportunity to create a little bit of extra wealth (may not need to be anything fancy - just something that brings some cash in to suplement my savings/mean that I don't draw down on the nest-egg).
AS above - we're on the same page.
Savvy advice for sure.
You're absolutely right - I am rushing it - and whilst I'm not comfortable with that, purely by accident, all my asset class is in one item - which is extremely volatile. If that bombs over the next 45 days, I end up on my ass. I have to resign myself to that eventuality. However, I have an insurance policy in that if that happens, I will spend a year travelling - enjoy it - and (reluctantly!!) go back to the job in Ireland that I absolutely hate (in fairness to them, they have just introduced a 1 year career break - and so I can return if I find at time of cash out - that the asset I've invested in implodes).
Once I have realised that gain, I will have time on my hands. I intend to get myself up to speed very fast in terms of traditional investing - with a balanced portfolio that hopefully I can structure to achieve a reasonable gain. I am not averse to allocating funds to property (on the basis that I would rent out rooms or apartments but will NOT make a kneejerk descision on that until I am in-country - and know the lay of the land. I need to have a true appreciation for the value of property there (got caught in the past in Ireland on that in the Celtic Tiger years! ...not going to happen again!).
@KellyXX: My pension will probably end up being miniscule - so I'm being conservative and not even working that in to the equation right now.
It's being done more and more often now. It depends on your personal circumstances. If you have family, then it's a difficulty. I'm on my lonesome - and I relish the chance to live somewhere new - so it's a no-brainer for me.
So you have hit the bitcoin jackpot.
Lucky and good for you.
Super volatile. It has made a lot of people a lot of money. If I even put 5% of my net worth into it last year I would be very very comfortably retired by now. Can’t win them all. It may go 10X from here or it may go to zero nobody knows just like nobody knew a year ago. It’s too volatile for me at my current stage. Have already suffered heavy losses in stocks in previous years and took me a while to get back in track. I can understand why you are looking to selll now.
What’s your thinking behind choosing Panama is it purely due to ease of residency for Irish people at a fairly low cost plus low cost of living or do you have friends there too? Did you look into anywhere else? It’s on my radar along with a few other countries in the not too distant future, maybe next year. If you plan to get your return through the stock market instead of property which is my plan for now then you can earn tax free in Panama I think (no CGT). Dividends are usually taxed at source so if you are investing on the ASX for example there will be tax withheld on your dividends before distribution (Property is similar AFAIK) I’m not sure how the double tax agreements play a role in this if any.
You really sound like your rushing things and I’m wondering why. Where is the 45 days coming from? You could sell them right now surely? Of course you will be liable for tax unless you have made some other arrangement or maybe that 1.2 you talk of is net after taxes?
If you are looking to set up residency in Panama with the view to selling your cryptos as a resident there and in effect not have to pay any tax on that you are mistaken. If you change residence from Ireland to Panama your obliged to inform the tax office that you will no longer be a tax
Resident in the state and you are supposed to pay up to date your position. Meaning if you haven’t even sold but are sitting on a gain of X then you are expected to pay to the tax office what you owe and then you are free to do as you please from then on in your new jurisdiction. This is the case in Australia anyway and I’m sure Ireland wouldn’t be any different.......Of course you could chance your arm and you may get away with it but that’s not something I can comment on and not something I would like to have hanging over my head.0 -
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My parents sold their house and paid of the 40k remaining on the mortgage.
The rest, about 300k, they set aside 10 X 20k money which they say will easily last them the 10 years they had hoped and more.
And they invested the rest.
Then they both have contributory pensions which they haven't even had to draw down on yet. I don't think they are old enough yet anyway to draw them.
Presumably your folks are renting in Spain, obviously going to be cheaper than renting in Ireland but would still be eating into their savings while they wait for the pension. If they have 2 contributory pensions coming in (eventually) they should be able to live comfortably on that. Living in another EU should also provide a lot of comfort from a medical/health (a big consideration unfortunately as one ages) point of view. So it looks pretty secure from a financial point of view.They are living the life as far as I can see.
Fair play to anyone who does it.
Fair play to them. It's not an easy or straightforward decision though, they are probably giving up a lot to live the life and presumably they did the blank sheet of paper filling in the pros and cons before going for it. You are giving up being close to a lifetime of relations and friendships (travel is easy and cheap but still an issue), the Sunday morning game of golf and craic, the Wednesday morning game of bridge, the Friday night Bingo, watching the Tournafulla junior As breaking ash over their local rivals, etc etc, all with lifelong fellow relations, members and friends. It involves building a whole new suite of friends and activities in Spain, very doable but a challenge nonetheless. Once you've made the rational decision though it should be happy days.Wouldn't mind retiring in my 50a lls myself. All this talk of.oncreasing retirement age is depressing. Obviously people with easy jobs trying to make decisions for those with hard jobs.
Unfortunately (for you) retirement age will have to continue to increase, there is no way out of that, anything else would be totally unsustainable with people living longer than ever before, a statistic that will continue to improve with advances in medical science. The pension age will probably have to increase at a far quicker rate than it is currently doing to make the whole pension thing viable. You can try to manage early retirement of course for yourself by building a pot that will keep you from your (hoped for) retirement age to reaching pension age.0 -
Think about early retirement like this;
Ask yourself, what is the minimum I need to retire early. Forget about all the doomsters, or financial sector sales people - its in their interest to scare you with large numbers. Theres plenty of people living the life on Benidorm, on very little.
Heres a stat. - for every 1K annual living expenses you can trim, it reduces the required pension pot size, by 25K.
Using the 4% SWR rule (look it up).
I wouldnt let anyone talk you out of it - a full working life is not for everyone.0 -
“Existing” somewhere like Benidorm wouldn’t be most people’s cup of tea.
It would be quite sad to be run out of one’s own country on the basis of not being able to afford to live there.
Half of one’s earnings is a decent target to aim for; it’s good enough for public servants with full service after all.0 -
Andrew Beef wrote: »“Existing” somewhere like Benidorm wouldn’t be most people’s cup of tea.
It would be quite sad to be run out of one’s own country on the basis of not being able to afford to live there.
Half of one’s earnings is a decent target to aim for; it’s good enough for public servants with full service after all.
Possibly better to do your sums on the basis that you can live where you chose within reason ie. not necessarily Monaco but definitely not Benidorm.
You don't want to end your years living out a real life version of "Best Exotic Marigold Hotel".0 -
Presumably your folks are renting in Spain, obviously going to be cheaper than renting in Ireland but would still be eating into their savings while they wait for the pension. If they have 2 contributory pensions coming in (eventually) they should be able to live comfortably on that. Living in another EU should also provide a lot of comfort from a medical/health (a big consideration unfortunately as one ages) point of view. So it looks pretty secure from a financial point of view.
Fair play to them. It's not an easy or straightforward decision though, they are probably giving up a lot to live the life and presumably they did the blank sheet of paper filling in the pros and cons before going for it. You are giving up being close to a lifetime of relations and friendships (travel is easy and cheap but still an issue), the Sunday morning game of golf and craic, the Wednesday morning game of bridge, the Friday night Bingo, watching the Tournafulla junior As breaking ash over their local rivals, etc etc, all with lifelong fellow relations, members and friends. It involves building a whole new suite of friends and activities in Spain, very doable but a challenge nonetheless. Once you've made the rational decision though it should be happy days.
Unfortunately (for you) retirement age will have to continue to increase, there is no way out of that, anything else would be totally unsustainable with people living longer than ever before, a statistic that will continue to improve with advances in medical science. The pension age will probably have to increase at a far quicker rate than it is currently doing to make the whole pension thing viable. You can try to manage early retirement of course for yourself by building a pot that will keep you from your (hoped for) retirement age to reaching pension age.
I think they have it all sussed alright.
I have an aunt who lives over there for the last 20 years so she helped them with the move. They went there a few times a year before they moved so they do love the place and have plenty of friends already there.
They are renting a nice 3 bed apartment in a complex with a pool and nice grounds with a golf course too. No electricity or any other services to pay for.
Beach and town about 5 minutes walk away.
All for €350 month, paid up front for the whole year every year.
There is some.club they have joined too that they pay a small amount for that arranges tours and entertainment nights etc . Think he said that was about €500 a year.
Other than that they have no expenses to speak of apart from food. I don't even think they cook at home anymore because eating out is so cheap. I'm going out to see them in March so I'll find out more, but I don't think they would be in the least financially taxed with it at all.0 -
Viscount Aggro wrote: »I discovered the FIRE concept back in 2012.
Was always frugal with money, but this put my savings rate onto another level.
The goal was always to retire early, at least by age 50.
My experience has been, dont tell friends and family what you are doing, it will end badly - they wont understand and will attack you.
Focus on your savings rate, forget the investing side, until you have your frugal muscle developed.
For the honours students, read Early Retirement Extreme, by Fisker - the website of the book. He retired at 27, by saving hard for 5 years.
Since JAN this year, I have been at 100% savings rate each month. Yes, I have enough passive income to support this.
It also helps that I know what I am doing, in terms of asset allocation, and tax and trading expenses.
I think in 2013 I squirrelled away a ton - combination of savings, market gains and dividends, bond interest.
As a rough guide, you need 25 times your annual living expenses.
The difference between 50 or 60% savings rate is 5 years more chained to a desk.
So, yes its hard to achieve FIRE in Ireland, but it is possible.
Hi there, I'm interested in your take on how to achieve FIRE in Ireland. All the blogs I read look at investing in ETFs which doesn't seem profitable in Ireland due to high taxes etc. Do you mind me asking your approach?0 -
There is loads of people out there doing it. One thing that comes through clearly as common to them all is that it is about keeping it simple, nothing complex, no get rich quick schemes, no ferraris and champagne, just hard work and perseverance.
http://rootofgood.com/zero-to-millionaire-ten-years/
Is there any of these with ordinary joes that get there by working/saving? The people in that story were adding more than their gross earnings into their savings account due to property/other influxes.
As well, I think giving up on holidays/scrimping on every dollar is no way to spend your life even if you are "retired". Think there's a balance somewhere to the north of that.
edit:Every year we saved more than half of our income. In other words, we saved all of my paycheck every year and then saved part of Mrs. RoG’s paycheck, too.
Just not possible to do that here.0
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