Informed Decisions Independent Financial Planning & Money Podcast

ARFs, AMRFs, AVCs, Annuities all form part of retirement planning, but as usual there's far more to it than products! Welcome back to Informed Decisions Finance Blog.

As part of my own motive to share information and to help others with their financial education I am a volunteer representative of the CCPC (State body that aims to help consumers, check out their website - tons of useful resources). I was delivering a talk to a large group last week in Dundalk, at the end of which we have time for Q&A. What struck me was that most of the questions relate to retirement planning, and indeed how to ensure that the planning we do is effective and of value to us when we get to the 'spending' phase after retirement. What also struck me is that in the past I have typically varied our topics, jumping from beginning to invest, to managing existing investments, regular savings, borrowings, mindset, education etc.

Based on feedback and also based on this recent experience the Blog will take a fairly heavy retirement-planning and indeed income-planning slant over the coming weeks at least. Having said that I hope to share ideas that are as relevant to those that are in 'accumulation' phase (mid-career) as much as it does to those that are in the 'spending' phase (retired or close to it!).

Intro:

I was talking to a friend of the family a few weeks back, recently retired and full of energy. This lady loves life, has a huge network of friends and family and is looking forward to hopefully many years of good times! When she asked me 'what are you doing these days' and I proceeded to tell her, she informed me that she has only 1 major regret, that she didn't plan a little better financially for her retirement. She doesn't have as much income as she would like in order to do the stuff she would like. It got me to thinking, about my own situation, and indeed of the situations of many people that I have come across over the years who have one eye on their graduation from full-time employment to a more leisure-based lifestyle!

We all obviously have differing circumstances and different opportunities and constraints however there are at least 5 pretty common mistakes I have seen happen again and again. Here I share the culmination of those thoughts, into '5 common retirement planning mistakes', in the hope that they might be of value to you, or indeed to your loved-ones.

In this week's podcast I speak with Nick McGowan from Lion.ie about protection from all angles. Particularly chatting about questions that often come up from those that are approaching or just starting retirement. Lion.ie is a bespoke protection advisor based in Tullamore that advises on all areas of protection - mortgage, life insurance, income protection, serious illness cover, etc. Lion offers advise to all but specialise in helping those with health issues get protection at the lowest cost. Key topics:

• Should we keep life insurance cover
• Is there a financial need
• Section 72 policies
• Death in Service Benefits while employed
• Income protection

I hope it helps. The Trading Game by Gary Stevenson Lion.ie

Hi, and thanks for popping in to listen to this weeks' Episode, which promises to be an interesting one for anyone who owns a car (so that represents the vast majority of us!). If you are new here please do check out this page, which will tell you a little about why this project exists and what it's aiming to do for you. Episode 21 is here:

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While some would argue that the cost of running a car hardly qualifies as a Financial Planning topic, I would beg to differ. Seeing as many of us possess one for the duration of our adult lives our choice of car represents a significant life long investment. What I am hoping to uncover is exactly how much they cost and what if any differences there are in buying a 'newish' car versus an older car!

Some of you at this point will hit the red 'x' in the top right hand corner, you like your cars, you don't care what they cost you, provided you can afford to have a 'nice' car you will continue to do so irrespective of the financial costs. I respect that, hit the red 'x', but might do you no harm to see what it is actually costing!

In the interest of being up front I will state that even before we look at the figures I have always had a strong bias towards owning older cars (6-10 years old) where the largest depreciation costs have been absorbed by a previous owner, however I am always open to correction, so lets see which option is the more informed from a financial perspective!

Assumptions:

For the purpose of this exercise I based my findings on 2 family sized cars. The 'newish' car is a 2013 Volkswagen Passat 1.6 Diesel from a dealer, with 62k miles on the clock costing €20,450- listed on Carzone.ie at time of the research.

The 'old' car for the purposes of this exercise is a 2007 Ford Mondeo, 1.8 Diesel, 90k miles on the clock costing €4,700 from a dealer, again it's listed on Carzone.ie at time of research.

Our exercise will assume we hold the car for 3 years, before changing it again for another car. Mileage assumed at 13,000 miles per annum.

The Cost of Owning a 'Newish' Car for 3 years:

1. Depreciation: €12,450 - Buy it for €20,450. Based on the research when you go to sell a car of this type in 3 years, assuming average mileage and it being well maintained, you will get approximately €8,000. Irrespective of selling it privately or trading it in this is the approximate value achieved (even VW which historically hold value reasonably well).
2. Fuel Cost: €4,029 - This modern car will give approximately 55 miles per gallon on average. www.honestjohn.co.uk is a great website for honest mileage numbers. Using a diesel price of €1.25 per litre, and traveling 13,000 miles per annum, that's the cost over the 3 years!
3. Motor Tax: €570 - As a post-2008 car, with relatively low emissions of 109g/km motor tax will set ou back €190 per annum
4. Maintenance: €1,200 - This assumes carrying out 1 annual service and changing 2 tyres per annum, with no other major outlay on this relatively young car
5. Insurance: €1,800 - This one is a big variable dependent on the driver and his/her status and years of no claims bonus etc, however the same figure will be used on both examples
6. Total Cost = €20,049

The cost of having this car for the 3 years is over €20,000. With good fuel economy and low tax it still amounts to a fairly sizeable amount of cash! If we break that down annually it is €6,683. Per month that is €557. If you are on the higher tax bracket you need to earn €1,100 Gross Salary in order to pay for your car..........................If you earn €50,000 Gross, that is 1 week's work per month to pay for your car! Seems hefty, but lets now compare it to the alternative, a cheaper, less flashy, less efficient and perhaps less reliable motor!

Cost of owning an 'old' car:

• Depreciation: €2,220 - Buy it for €4,700. Based on the research when you go to sell a car of this type in 3 years, assuming average mileage and it being well maintained, you will get approximately €2,500. Irrespective of selling it privately or trading it in this is the approximate value achieved.
• Fuel Cost: €5,039 - This less modern car will give approximately 44 miles per gallon on average. Using the same diesel price of €1.25 per litre, and travelling 13,000 miles per annum, thats the cost over the 3 years for this car.
• Motor Tax: €2019 - As a pre-2008 car, with a 1.8 litre engine you are in for a juicy €673 per year road tax, no avoiding it!
• Maintenance: €2,400 - This assumes carrying out 1 annual service and changing 2 tyres per annum. In this instance we have included €300 per annum for ad-hoc repairs. While this could be quick a lot more or less on a car of this age and mileage this average is an industry accepted figure.
• Insurance: €1,800 - Th...

This week's podcast is the 300th Informed Decisions Personal Finance Podcast, so it is a little bit different than the usual!

Key topics are:

• Inflation vs Investments over the past few years, what has or has not retained your purchasing power
• Informed Decisions Financial Planning may be hiring!
• I interview my kids, my most challenging interview to date!

Hope you enjoy!

Welcome to Ireland’s only dedicated and straight-talking Personal Finance & Financial Planning Podcast. Delighted you have decided to have a look at this weeks’ episode. Firstly, want to say a heart-felt thank you to all listeners of the Podcast and readers of the Blog for their encouragement and feedback over the past 2 years, we picked up the title of ‘Ireland’s Best Finance Blog’ at the Irish Blog Awards last week in Dublin, totally surprised to win it for the 2nd year in a row, particularly against such top-drawer blogs as the Zurich, Bank Of Ireland, Taxback.com to name just a few. I’m a big believer is not focusing on the past too much, whether it is a high or a low, o lets get stuck in to this weeks’ episode!

We are joined in conversation by Derek Bell, the Chief Exec of the Retirement Planning Council of Ireland, which is based in Dublin. While it might sound a little like just another pensions company they are actually anything but. They provide, what to me sounds like, an invaluable service to people who are on the verge of retiring from their jobs here in Ireland. They run courses which help people to consider all they need to consider in advance of ‘graduating’ from their full-time permanent positions.......and to head off into the sun-set.

Derek shares with us in this 30 minute or so Podcast what he believes are some of the main aspects which people often overlook when considering retirement, and the funny thing a lot of those aren’t the financial, which makes it all the more interesting to hear and consider.

And be sure to listen through to the end where Derek shares the single biggest piece of advice he believes will impact on anyone who is preparing to retire, be that 40 years or 40 days away.......enjoy!!

Oh, be sure to drop me a mail here with your ideas, suggestions or feedback on how to make the Podcast/Blog as effective and useful as it can be, please!

Cheers,

Paddy Delaney

QFA | RPA | APA | Coach