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.

https://goodbodywealthmatters.ie/wp-content/uploads/Kevin-mob-991px.jpg

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.

https://goodbodywealthmatters.ie/wp-content/uploads/Horse-mob-991px.jpg

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

Kevin’s pension value would exceed his Standard Fund Threshold if left unchecked and incur significant tax charges.

Kevin could free up some funds by accessing his pension fund lump sum entitlement and leaving the remaining fund to grow in an Approved Retirement Fund.

Kevin was unclear whether he could afford to earn less after redundancy and still meet his retirement ambitions.

After calculating a retirement income need of €72k p.a. net, we established Kevin’s earnings from any new job needed to be in excess of €150k p.a.

Looking at Kevin and Louise’s estate, we estimated an inheritance tax liability €1m which would be payable by Kevin and Louise’s two children.

There are some strategic planning options for Louise and Kevin to consider to offset some of this liability on behalf of their children.

Kevin and Louise had €1m of assets that needed investing, but both had very different appetite for taking risks.

We built a moderate portfolio with a target return of 3.5% p.a. which was made up of a mix of funds that reflected Kevin and Louise’s combined risk profiles.

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

Kevin’s pension value would exceed his Standard Fund Threshold if left unchecked and incur significant tax charges.

Kevin could free up some funds by accessing his pension fund lump sum entitlement and leaving the remaining fund to grow in an Approved Retirement Fund.

Kevin was unclear whether he could afford to earn less after redundancy and still meet his retirement ambitions.

After calculating a retirement income need of €72k p.a. net, we established Kevin’s earnings from any new job needed to be in excess of €150k p.a.

Looking at Kevin and Louise’s estate, we estimated an inheritance tax liability €1m which would be payable by Kevin and Louise’s two children.

There are some strategic planning options for Louise and Kevin to consider to offset some of this liability on behalf of their children.

Kevin and Louise had €1m of assets that needed investing, but both had very different appetite for taking risks.

We built a moderate portfolio with a target return of 3.5% p.a. which was made up of a mix of funds that reflected Kevin and Louise’s combined risk profiles.

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.

https://goodbodywealthmatters.ie/wp-content/uploads/Wife-mob-991px.jpg

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