Farm retirement planning & pensions

Muckit

No point slaving and not having allowed for a nest egg!

A good mix of older and younger farmers on here. Would be good to set up a knowledge transfer type thread going on what to do and what not to do!!

Everyone's thoughts and ideas on the subject welcome.

TooOldBoots

Pension is the one decent Tax break there is in Ireland. No point paying income tax and not looking out for yourself in the future.
I doubt you could live off the State pension down the road.
€10 per week for a 20 year old is worth the same as paying €100 for a 40 year old, so the earlier you start the better

farawaygrass

As I said earlier I’m 33 and just starting a pension. Going to go with €25 a week for now. I’m think of putting down the age of retirement as 60, instead of 65. I work a physical off farm job and it would be nice to be able to finish work a bit younger. I’ll have a chat with the adviser during the week though first

Who2

I’m seriously looking at forestry, I started a pension fund with a bank a good few years back and disappointing wouldn’t even cover it. I’m in my late thirties so it’s becoming fairly important right now, I thought property was the best option years ago but as I stated in another thread it’s pointless unless your in a high demand area such as Dublin. Ive a rental here that I’m thinking of cashing in and investing into forestry, tax free payments are what’s important and I’d have a decent lump sum before I hit 70.

Hard Knocks

farawaygrass wrote: »

As I said earlier I’m 33 and just starting a pension. Going to go with €25 a week for now. I’m think of putting down the age of retirement as 60, instead of 65. I work a physical off farm job and it would be nice to be able to finish work a bit younger. I’ll have a chat with the adviser during the week though first

Is your off farm job employment contributing to your pension?
At 33 I don’t think €100 per month is enough

hopeso

I'm paying into a pension for a good few years at this stage...Although retirement age is a bit away yet, I was giving it some thought recently... I am single, with no one to take over the farm, but saying that, I know of many men with families, and they too have no one to take over, as the sons and daughters are away working with no interest in farming.. Anyway, as I see it, I have two options when I hit retirement age..One, sell or lease the lot and live of the proceeds, or two, just keep working it until I'm carried out of the place in a box, as I see so many farmers around here anyway doing. Either way, I'll have an income, so is a pension really that important to me?

amacca

I just wish you could manage your own pension + get the tax breaks associated with contributions to a normal pension plan

I'd be interested in making investing in ETFs/index trackers but with the ability to control when the fund is invested and when its not based on the performance of the market .....

Im fairly sure you can't do that here....in fact investing in stocks and shares in this country is very backward compared to some other jurisdictions imo...you hit tax after just e1270 I think (1000 punts old money).....they just converted at the time of the currency changeover and it hasn't been updated since its that out of date.

.....I'd have a deep distrust of traditional pension products with large fees for execs and manager types and the potential to loose all tax relief or more if its not managed properly or you are unlucky enough to be retiring in a protracted downturn etc

Dinzee Conlee

amacca wrote: »

I just wish you could manage your own pension + get the tax breaks associated with contributions to a normal pension plan

I'd be interested in making investing in ETFs/index trackers but with the ability to control when the fund is invested and when its not based on the performance of the market .....

Im fairly sure you can't do that here....in fact investing in stocks and shares in this country is very backward compared to some other jurisdictions imo...you hit tax after just e1270 I think (1000 punts old money).....they just converted at the time of the currency changeover and it hasn't been updated since its that out of date.

.....I'd have a deep distrust of traditional pension products with large fees for execs and manager types and the potential to loose all tax relief or more if its not managed properly or you are unlucky enough to be retiring in a protracted downturn etc

Someone said to me once you can setup your own pension fund, be it forestry or houses or whatever... and control it yourself...

I don’t know how true it is, but the lad who told me seemed to be fairly sure...

Might be worth checking out...

farawaygrass

Hard Knocks wrote: »

farawaygrass wrote: »

As I said earlier I’m 33 and just starting a pension. Going to go with €25 a week for now. I’m think of putting down the age of retirement as 60, instead of 65. I work a physical off farm job and it would be nice to be able to finish work a bit younger. I’ll have a chat with the adviser during the week though first

Is your off farm job employment contributing to your pension?
At 33 I don’t think €100 per month is enough

I’m sure your right, but I’ve have other commitments at the moment too, mortgage, small bit of farm loan, young kids, and elderly parents. So €25 although low is better than nothing. I can always increase in the future when the right time comes

TooOldBoots

Avoid Irish life, costly and gives a poor performance from their pension plans. For €25 contribution it could be worth taking a chance with one of the smaller independent pension investors

Water John

I think a mix of things might be best. Def put some in a pension fund from an early age. Leasing the farm, esp tax free is a great option for some.

farawaygrass

TooOldBoots wrote: »

Avoid Irish life, costly and gives a poor performance from their pension plans. For €25 contribution it could be worth taking a chance with one of the smaller independent pension investors

It’s an independent place alright. They look after anyone at work that has one, and talking to a few of the older lads them seem happy enough with it

amacca

Dinzee Conlee wrote: »

Someone said to me once you can setup your own pension fund, be it forestry or houses or whatever... and control it yourself...

I don’t know how true it is, but the lad who told me seemed to be fairly sure...

Might be worth checking out...

eh? so you can direct funds to real world investments and get the tax relief if you designate the investments to be part of your pension?

hadn't heard of that......presumably if it exists there are rules....couldn't possibly be direct ownership of a property could it?...maybe an investment in a specified REIT or something?

anyone heard of that...id be away with it if I could put it in an index tracker and buy and sell keeping the funds in a protected account or something

_Brian

We’ve a second house we rent out, might keep it long term for pernsion or move it in before that.

It’s not trouble free though, if someone felt they wouldn’t enjoy it forestry surely would have less hassle involved.

I’ll have a private pension along with state and herself will have a pension from hse, nothing great though as she’s worked reduced hours for so long, also she won’t get a state pension.

Bass Reeves

There are a myrid of ways for providing for your retirement. The first thing to remember that most of us may not retire completely until we are even beyond pension age. The HSe is now giving Nurses the option of taking there pensions and working 15-20 hours/week just as an example.

Property is the preferred option in the case of many especially of those in the building industry. Yes renting houses are a bit of hassle but nobody will give you money for nothing. As I posted on another thread if investing in property ayield of 8%+ is requires and ideally above 10-12%. Depending on capital appreciation in a rented house is a recipe for disaster like many in the noughties tried. The advantage of property is that you can leverage it but you should be borrowing over 20 years only and look at yield.

Pension funds have cleaned up there act a good bit. With tax relief and if you are employed and your employer contributes as well they are a no brainer. However even for a self employed person they are a viable option provide you look at the long term and invest with that in mind. They will go up and down in value and first day costs are atrocious but not as bad as they were. Ask a good independent advisor will cost a few euro but they can advise best.

Even if you are in your 50's or older looking at pension funds is an option if you intend to retire in the next few years. Lump sump contributions if you are on the high tax rate are an ideal way to put a few bob away. Self employed can take a 200K lump sum out of a pension or investment I think however confirm with accountant. PAYE wprkers can take 1.5 time the average of there best consecutive p60's over the last 10 years. My generation is lucky in that as we had our childern in our late 20's early 30's most are gone through college by our mid late 50's That can often throw income free that we can invest in pension as I am explaining now. Take a couple maybe paying 15K at the higher tax ban these can put away 150K over 10 years in to low risk funds and draw down at retirement as a lump sum.

Another option is to have consider ways of having an income that require either less work or where other can have an input. This is an option on Farmrs in tourism area's where you nay convert buildings into tourism rentals. and maybe one of your children look after the with you. Biggest issue is being tied down full time. Most of us will require something to occupy us parttime until we hit out 70's.

In my own case I have a mixture, I will have a pension which I intend to start drawing down at 60's, I will use the farm to supplement that until I retire from that. We have a rental investment that will leave 100ish/week when paid off and a small share fund which if I could cash in now I would.

blue5000

Like others on here I have a mixed bag. Property rental which can be sold down the road, I paid into a pension but stopped when the returns were so bad, but the nest egg is still there and I've a bit of forestry.

Better to start early than late no matter what it is. Make sure you 'contribute' to the state pension as well, it should put groceries on the table from the age of 70 onwards at least.

Bass Reeves

blue5000 wrote: »

Like others on here I have a mixed bag. Property rental which can be sold down the road, I paid into a pension but stopped when the returns were so bad, but the nest egg is still there and I've a bit of forestry.

Better to start early than late no matter what it is. Make sure you 'contribute' to the state pension as well, it should put groceries on the table from the age of 70 onwards at least.

Forestry is dependent on whether you own the land or not. It is not an option I think to go and buy land to afforest it even if in your 30's. Sums do not seem to add up. A few years ago it did but not now i think. Lands is 4-5K and premium will not pay for it over 15 years IF you look at the premium it is about 250-300/acre so I think not viable as a pension investment unless you own the land.

trg

Pensions very good but need active management i.e. you need to know the type of funds you're invested in and be happy with the level of risk. If your approaching the 60 mark it would, in my opinion, be lunacy to have them in a high risk albeit potentially high growth fund.

How about buying a parcel of land? Lease out, claim tax free income and sell on if and when need arises.