The ‘time to slow down’ plan.
At 51 redundancy was
unexpectedly put on the table,
so I seized it with both hands.
It was a chance to slow down.
Kevin, 51
Chief Financial Officer, International Tech Company
I’d been climbing the big corporate ladder all my career,
constantly seeking promotion, constantly travelling and
constantly taking on more responsibility.
When redundancy struck, I saw it as an opportunity
to slow down. The question was, how much could I afford
to slow down by?
The ‘time to slow down’ plan.
At 51 redundancy was
unexpectedly put on the table,
so I seized it with both hands.
It was a chance to slow down.
Kevin, 51
Chief Financial Officer, International Tech Company
I’d been climbing the big corporate ladder all my career,
constantly seeking promotion, constantly travelling and
constantly taking on more responsibility.
When redundancy struck, I saw it as an opportunity
to slow down. The question was, how much could I afford
to slow down by?
A Frustrating Amount of Money
With pensions, savings and redundancy I had a frustrating
amount of money, enough to give me a good lifestyle,
but not enough to maintain it to retirement.
I knew I needed a new source of income.
However, I simply wanted to spend more time with my
family and indulging my passion for horse racing.
That dilemma led to some financial soul searching…
- Could I afford to take a 12-month career break?
- How much income would I actually need in retirement?
- How much more did I need to earn over the next 10 years?
- Should I pay off the mortgage before getting a new job?
- The stress of my job had taken its toll on my health, so I promised my wife Louise I’d slow down. Could I afford to keep that promise?
A Frustrating Amount of Money
With pensions, savings and redundancy I had a frustrating
amount of money, enough to give me a good lifestyle,
but not enough to maintain it to retirement.
I knew I needed a new source of income.
However, I simply wanted to spend more time with my
family and indulging my passion for horse racing.
That dilemma led to some financial soul searching…
- Could I afford to take a 12-month career break?
- How much income would I actually need in retirement?
- How much more did I need to earn over the next 10 years?
- Should I pay off the mortgage before getting a new job?
- The stress of my job had taken its toll on my health, so I promised my wife Louise I’d slow down. Could I afford to keep that promise?
A winning tip from a friend
I was at the races in Leopardstown with a friend and he said to me: Kevin you’re 51. You’ve got more years behind you than ahead of you. It’s time to put yourself first.
My friend’s advice really focused my mind. I started to think
about what I needed to earn rather than how much I could
earn. I needed help to work that out.
I’d worked with Goodbody’s corporate finance team, so I asked one of them, who I knew, if they could introduce me to their Private Client Team.
A winning tip from a friend
I was at the races in Leopardstown with a friend and he said to me: Kevin you’re 51. You’ve got more years behind you than ahead of you. It’s time to put yourself first.
My friend’s advice really focused my mind. I started to think
about what I needed to earn rather than how much I could
earn. I needed help to work that out.
I’d worked with Goodbody’s corporate finance team, so I asked one of them, who I knew, if they could introduce me to their Private Client Team.
The Goodbody Advice
Focus on the pension.
Kevin was looking for the reassurance that he could start putting life
before work without jeopardising his lifestyle in retirement.
Central to Kevin’s wealth was his pension, which left unchecked, would
exceed the €2.15m pension limit Standard Fund Threshold leading to a significant tax charge:
Current Pension Value Age 51
€1,670,000
The combined value of
Kevin’s occupational pension
scheme and his defined benefit
pension transfer value.
Current Pension Value Age 51
€1,670,000
The combined value of
Kevin’s occupational pension
scheme and his defined benefit
pension transfer value.
Strandard Fund Threshold
€2,150,000
Any pension assets above this
are subject to chargeable excess
tax at 40%. The residual fund
will suffer marginal tax rates which
could bring the effective
tax rate to circa 71%.
Strandard Fund Threshold
€2,150,000
Any pension assets above this
are subject to chargeable excess
tax at 40%. The residual fund
will suffer marginal tax rates which
could bring the effective
tax rate to circa 71%.
Projected Value Age 60
€2,276,039
Based on 3.5% growth p.a.
Kevin’s pension value would
exceed his Standard Fund Threshold within 10 years.
Projected Value Age 60
€2,276,039
Based on 3.5% growth p.a.
Kevin’s pension value would
exceed his Standard Fund Threshold within 10 years.
We advised Kevin to take the 25% lump sum now from his pension fund to clear
the mortgage and leave the remaining 75% to grow in an Approved Retirement Fund.
This also created headroom within Kevin’s Standard Fund Threshold so he could make
further pension contributions once he’d found a new job.
The Goodbody Advice
Focus on the pension.
Kevin was looking for the reassurance that he could start putting life
before work without jeopardising his lifestyle in retirement.
Central to Kevin’s wealth was his pension, which left unchecked, would
exceed the €2.15m pension limit Standard Fund Threshold leading to a significant tax charge:
Current Pension Value Age 51
€1,670,000
The combined value of
Kevin’s occupational pension
scheme and his defined benefit
pension transfer value.
Current Pension Value Age 51
€1,670,000
The combined value of
Kevin’s occupational pension
scheme and his defined benefit
pension transfer value.
Strandard Fund Threshold
€2,150,000
Any pension assets above this
are subject to chargeable excess
tax at 40%. The residual fund
will suffer marginal tax rates which
could bring the effective
tax rate to circa 71%.
Strandard Fund Threshold
€2,150,000
Any pension assets above this
are subject to chargeable excess
tax at 40%. The residual fund
will suffer marginal tax rates which
could bring the effective
tax rate to circa 71%.
Projected Value Age 60
€2,276,039
Based on 3.5% growth p.a.
Kevin’s pension value would
exceed his Standard Fund Threshold within 10 years.
Projected Value Age 60
€2,276,039
Based on 3.5% growth p.a.
Kevin’s pension value would
exceed his Standard Fund Threshold within 10 years.
We advised Kevin to take the 25% lump sum now from his pension fund to clear
the mortgage and leave the remaining 75% to grow in an Approved Retirement Fund.
This also created headroom within Kevin’s Standard Fund Threshold so he could make
further pension contributions once he’d found a new job.
I hadn’t planned to touch my
pension until I was 60.
But taking the pension lump sum
and then using it to clear
the mortgage was well
worth celebrating.
I hadn’t planned to touch my
pension until I was 60.
But taking the pension lump sum
and then using it to clear
the mortgage was well
worth celebrating.
A glimpse of the whole plan.
By modelling a number of life-time cashflow scenarios we
were able to create a plan that would enable Kevin to earn less,
take a well deserved year off and still retire at 60.
Once I saw the impact the recommendation would have on my retirement, I knew it was good advice.
Key Recommendations
A glimpse of the whole plan.
By modelling a number of life-time cashflow scenarios we
were able to create a plan that would enable Kevin to earn less,
take a well deserved year off and still retire at 60.
Key Recommendations
Once I saw the impact the recommendation would have on my retirement, I knew it was good advice.
A final Thought from Louise
Once Kevin realised he no longer needed to continue earning at the same level it was like a huge weight had been lifted.
He suddenly started living life rather than worrying about it. And that inevitably meant more days at the races.
A final Thought from Louise
Once Kevin realised he no longer needed to continue earning at the same level it was like a huge weight had been lifted.
He suddenly started living life rather than worrying about it. And that inevitably meant more days at the races.
What’s your plan?
Please contact us if you think your life could be enriched by a financial plan.
