Mary (not her real name) age 55 was referred to me about 5 years ago because she wanted to know if I could help her answer some important questions around her finances. Her 2 lifelong friends were also planning to retire in the next few years and all 3 loved to travel and wanted to do much more of the same when retired. Mary also wanted to spend more time with her elderly parents.

She had a very good salary but also a mortgage and some short term debt . The mortgage repayment of €1,250 per month was not due to end until she was 68 and this worried her. Also the short term loan was a car loan costing €600 per month.

She had €150,000 on deposit most of which came from an inheritance. Her Pension Pot amounted to approx €750,000 which, was a mixture of current and previous employment pensions.

To help Mary work out if it was feasible for her to retire at 60 or even earlier and still be able to travel and live the lifestyle she had been accustomed to and not worry about running out of money in later life. And not to feel guilty about spending money in the early years of retirement either.

Through a series of meetings I developed a thorough understanding of her Financial situation and what her plans for the future were. We fully costed everything about her lifestyle and using prudent assumptions about investment returns and taking account of future inflation, we developed a detailed Financial Plan.

We identified a shortfall of €200,000. in her finances. We looked at how we could rearrange her finances to be more tax efficient, and to cut down on some of her day to day expenditure which was quite high.

The big problem was that debt and discretionary spending was eating up a lot of her net income . Using my Expenditure questionnaire which helps clients to identify where the money is being spent, we identified €400 per month of expenditure which was of no value. We used some of her cash on deposit to make a lump sum payment off the mortgage and clear the car loan. The monthly saving in debt repayments combined with expenditure savings amounted to €1,650 per month. This allowed her to increase her pension contribution by €2,750 per month, and based on 5 years @ 3% growth amounted to almost €180,000 extra in her pension pot with income tax savings of €1,100 per month.

She also availed of the rent a room scheme to generate an extra €7,000 per annum for the following 5 years which gave her an extra €35,000 tax free. We used this as an overpayment on her mortgage to bring the term down so that the mortgage would finish much earlier

With some rearranging of her existing investments and reduction in unnecessary spending and the freeing up of income previously used to make loan repayments, Mary was able to make better use of her disposable income.

She was able to make smarter choices and this had a big impact on her wealth, which ultimately allowed her to take the big step to retire as planned this year.