Why are people obsessed with getting a pension

Midlife crisis man

What's the point having one.

About myself: I don't have a pension. I came from a poor background and was never thought about the importance of financial awareness.

I struggled throughout the recession eventually going back to college. I'm in my mid 30s now recently started working in the public sector. I'm only on 25k per year. I'm not entitled to the public sector pension because I'm on a fixed term "trainee" contract in my field.

Also if I happen to stay in the public sector for the rest of my career I won't be long enough to get the cushty 40 year pension anyway.

So, in the next 30 years the retirement age will probably be closer to 70. Why save the bollox off myself just so I have a bit of cash when I'm an auld fella with (best case scenario) 10 years of life left. Who needs that much money at that age. Am I missing something here? You can't take it with you when you die.

I'm sure I'll have a good bit of regular savings by then but what's with the obsession of pumping as much money as you can into a pension (that'll end up getting raided by the government in subsequent recessions anyway)

I'm going to enjoy my money while I have health and vigour and the government can look after me when I'm an auld boy.

Addle

How do you/will you pay for a roof over your head?

dar_cool

Im in private sector, I put 5% in my pension and my employer puts 10% in on top of that. Its free money. If I dont get to enjoy my retirement then my kids will get the use of it. Its a no brainer in my opinion

adox

You need money to live. You won’t have any source of income in most cases when you retire.

It’s the best bang for buck at the moment.

Plumbthedepths

So you are in your 30's and you are assuming there will be a state pension there when you retire. At present the pension time bomb is being kicked down the road. Best to plan for no state pension.

MayoSalmon

Being young and poor is one thing...being old and poor is game over.

Heres Johnny

1 - I want to retire early, at about 60
2 - I don't care what age I am, I don't want to be on 33% of the average industrial wage. Or about 15% of my current income at the moment.

Planning is the only way I can avoid this.

SureYWouldntYa

There’s the tax incentives too

I dont know the exact rates, but putting €1000 in your pension pot might only cost €600 or so, again not sure of the exact rates but there are incentives

Also the earlier you start the better. Assuming a nominal rate of return and contributions across all years, your pension at pension age will be worth more if you invest from 25-35 and stop than if you start at 35 and go to 65, such is the power of compounding

Geuze

Midlife crisis man wrote: »

What's the point having one.

About myself: I don't have a pension. I came from a poor background and was never thought about the importance of financial awareness.

I struggled throughout the recession eventually going back to college. I'm in my mid 30s now recently started working in the public sector. I'm only on 25k per year. I'm not entitled to the public sector pension because I'm on a fixed term "trainee" contract in my field.

Also if I happen to stay in the public sector for the rest of my career I won't be long enough to get the cushty 40 year pension anyway.

If you join the PS, you will join a PS pension scheme.

You will have to contribute.

The conts are good value, 6.5% of wages, plus ASC of 10%.

In return, you get a DB pension.

Look forward to it, don't complain about it.

Geuze

Midlife crisis man wrote: »

I'm sure I'll have a good bit of regular savings by then but what's with the obsession of pumping as much money as you can into a pension (that'll end up getting raided by the government in subsequent

No need to pump as much as you can.

Just make sure you have an income post 65.

bilbot79

You do realise pension saving is tax free but regular saving is not?

cormie

I think if say for example, you're self employed with no dependents and think with that money you'd be putting away, you'd be able to generate more money for the future, by having that money available to invest now, and still have it available now should things get tight, or you find out you're terminally ill or something like that instead of not being able to touch it until you reach a certain age, then it makes a lot of sense not to put money towards a pension.

DaisysB

Also if I happen to stay in the public sector for the rest of my career I won't be long enough to get the cushty 40 year pension anyway.

You should look up the Single Pension Scheme that applies to entrants since 2013, that cushty 40 year pension is long gone!

AlmightyCushion

cormie wrote: »

I think if say for example, you're self employed with no dependents and think with that money you'd be putting away, you'd be able to generate more money for the future, by having that money available to invest now, and still have it available now should things get tight, or you find out you're terminally ill or something like that instead of not being able to touch it until you reach a certain age, then it makes a lot of sense not to put money towards a pension.

A pension isn't an all or nothing thing. You shouldn't put every spare penny you have into a pension. You need to keep some for emergencies (like illness as you mentioned) and various other situations. Putting every thing you have into a pension is a bad idea. Not putting anything into a pension is also a bad idea.

PhilOssophy

I want to live out my days lighting cigars with 50 euro notes and snorting coke on a yacht with a load of hookers around me, not unable to afford to turn on the heating......

.......

PhilOssophy wrote: »

I want to live out my days lighting cigars with 50 euro notes and snorting coke on a yacht with a load of hookers around me, not unable to afford to turn on the heating......

Is that you Bertie?

Jim2007

cormie wrote: »

I think if say for example, you're self employed with no dependents and think with that money you'd be putting away, you'd be able to generate more money for the future, by having that money available to invest now, and still have it available now should things get tight, or you find out you're terminally ill or something like that instead of not being able to touch it until you reach a certain age, then it makes a lot of sense not to put money towards a pension.

No it does not. You are failing to take human nature into account. Given access to pension savings, people will always find a very good logical reason to spend it. If you look at countries that allow access such as the US 401K, IRA etc, you find that the people's total net worth on reaching retirement is very low.

Here in Switzerland pension funds are very tightly controlled both in terms of contribution and management. So much so that if a fund manager fails to return a predefined minimum return as set by the government, they are required to pay into the fund to bring it up to the expected level.

As a result it is not unusual to find say an electrician retiring at 58 with 600K - 700K in their fund.... and the big shock provably for an Irish person is that the consider putting more the 7% of it into property as being a very foolish thing to do.

gimli2112

It's like religion if you don't have it there's nothing to look forward to......like nothing

Tow

OP, every employee will be 'auto enrolled' into a pension next year 2020 at the earliest... Long term this will allow the government to reduce/drop the state pension.

hmmm

Wait till you get to 50, and things are creaking, and you're beginning to forget things, and younger people are getting promoted, and your job is beginning to be automated, and you wonder how you're going to keep working until you're well into your 60s.

It's too late then to start saving.

More than anything else, having savings gives you options. And a pension is a way to save tax-free until you need it.

Steer55

They have auto enrolment in UK last few years. Most low paid workers are paying in a pittance, not a hope will they pay in e ough to even get back 20 pound a week in retirement. Low paid workers simple can't afford it. In the future no doubt contributify state pension will be means tested and that will remove all those with big private pension pots. Sadly they will be the ones who paid in the most.

Tacklebox

I live in the moment, seen enough pensions go down the drain.
People who gamble on a high risk product, end up with one eight of what they invested in.
Trends change, but the pension sales person will pull the wool over your eyes with soundbites and fancy phrases...

I bought a big house with inheritance in 2002, off the plans, luckily its in a nice estate, detached 5 bedrooms and well insulated.

Ill sell it before I retire, buy something much smaller and have the rainy day money and leave the house to my son.

I know its a bit of a gamble but I think its a lot less of a risk than buying into a pension.

SureYWouldntYa

Tacklebox wrote: »

I bought a big house with inheritance in 2002

So you could say that's your retirement investment, which you're lucky to have, that nestegg means you have some security for the future

A lot aren't though, that's what pensions are for

Steer55

Jim2007 wrote: »

cormie wrote: »

I think if say for example, you're self employed with no dependents and think with that money you'd be putting away, you'd be able to generate more money for the future, by having that money available to invest now, and still have it available now should things get tight, or you find out you're terminally ill or something like that instead of not being able to touch it until you reach a certain age, then it makes a lot of sense not to put money towards a pension.

No it does not. You are failing to take human nature into account. Given access to pension savings, people will always find a very good logical reason to spend it. If you look at countries that allow access such as the US 401K, IRA etc, you find that the people's total net worth on reaching retirement is very low.

Here in Switzerland pension funds are very tightly controlled both in terms of contribution and management. So much so that if a fund manager fails to return a predefined minimum return as set by the government, they are required to pay into the fund to bring it up to the expected level.

As a result it is not unusual to find say an electrician retiring at 58 with 600K - 700K in their fund.... and the big shock provably for an Irish person is that the consider putting more the 7% of it into property as being a very foolish thing to do.

But that is Switzerland totally different country!

The Irish were badly burned by bamk shares during the crash, Brendan Investments etc. Give me bricks and mortar any day.

Mantis Toboggan

20% of people die in Ireland before they reach 65 so I'd slightly agree with the OP, chances are you'll never see that money. Life is short, enjoy it, we'll all be dead in 80 years anyway and a few years dead and you're long forgotten.

Jim2007

Midlife crisis man wrote: »

What's the point having one.

About myself: I don't have a pension. I came from a poor background and was never thought about the importance of financial awareness.

Bit embarrassing having to explain this to a student of accounting.... but in any case.

Midlife crisis man wrote: »

So, in the next 30 years the retirement age will probably be closer to 70. Why save the bollox off myself just so I have a bit of cash when I'm an auld fella with (best case scenario) 10 years of life left. Who needs that much money at that age.

The state pension is a simple 'pay as you go' system meaning current contributions cover current pensions and no more. Now with the change in demographics this will not last because there will not be enough contributions to cover pensions so not only can you expect the pension age to go up, you can expect the weekly payout to go down.

Midlife crisis man wrote: »

Am I missing something here? You can't take it with you when you die.

I'm sure I'll have a good bit of regular savings by then but what's with the obsession of pumping as much money as you can into a pension (that'll end up getting raided by the government in subsequent recessions anyway)

Yes you are leaving free money on the table.

I'm going to enjoy my money while I have health and vigour and the government can look after me when I'm an auld boy.[/QUOTE]

The problem is you will not be the only one... First of all in 30 years time the demographics will have flipped and there will be more people needing help than earning, so you can expect that government funds will be less on top of everything else.

Here in Switzerland we already have that situation. The annual state pension would cover your living costs for about 3 months, the other nine months is something you needed to finance out of your savings.

Yes there are Swiss state services to help those in need, but they have limited funds, so the very first think they do is look at your accommodation needs and tell you to downsize if possible and use the money to live, next person goods etc must go and so on. Only when you have exhausted all possibilities will you get access to state funds. Being old is one thing, but being poor as well... not what you want.

Some Swiss people can not even afford to live here all year around, so they have had to move to Spain, Portugal, Morocco, Thailand etc. to try and manage on their pension. At the state to have to leave your local community, friends etc not something most people want to do.

And the other thing is why would you even want to work until you're 70 for heavens sake. I'm 55 and most of my friends are about the same age and we are all very happy that we'll be pulling the plug on it in the next year or two, I already have. And I can tell there are a lot more interesting things to be doing at 55 than having to deal with office politics etc...

SureYWouldntYa

Mantis Toboggan wrote: »

20% of people die in Ireland before they reach 65 so I'd slightly agree with the OP, chances are you'll never see that money. Life is short, enjoy it, we'll all be dead in 80 years anyway and a few years dead and you're long forgotten.

And 80% will live past 65. But sure why save for anything. Could be hit by a bus tomorrow, why not spend €800 in the pub.

Tacklebox

SureYWouldntYa wrote: »

So you could say that's your retirement investment, which you're lucky to have, that nestegg means you have some security for the future

A lot aren't though, that's what pensions are for

I totally understand that, im not a big earner so I don't think I could afford a pension, ill probably end up with something similar to someone who can afford a trustworthy pension.

If things changed I'd probably invest in filtration systems or renewable energy, because clean energy and water conservation will be the future in my lifetime anyhow I think.

Maybe horticulture could become popular again too.

Steer55

Spain and Portugal are simply fantastic places to retire to during our long, dark cold winter months, and alot cheaper than Ireland too.

cormie

Jim2007 wrote: »

No it does not. You are failing to take human nature into account.

It probably makes sense for the majority of workers, but that's not to say there are others who would be better off having that money available now to use to create opportunities for an even more comfortable future and present.

Mantis Toboggan

Mantis Toboggan wrote: »

20% of people die in Ireland before they reach 65 so I'd slightly agree with the OP, chances are you'll never see that money.

fantastic sentence.