Pension Advice

Clo-Clo

So lots of noise at the moment about pensions, I have one since early 2000's but I pay the minimum in, well to tell the truth I have no idea as I never changed any setting, reading the output at the moment my employer has actually paid in more than me. Not great I know.

So I put money into saving etc and of course seeing lots of videos online saying the pension is a better long term saving.

I am looking to save now for kids going to college in 10 years when I will be 50+

Now I have asked the company that does my mortgage for an advisor to contact but wanted to do some digging beforehand.

As you can see I am clueless in regards to this, maybe the main question is putting into the like of state saving better than putting into a pension?

Thanks and not sure if right spot.

Buddy Bubs

You'd be surprised how much your contributions since early 2000s will have grown, especially since your employer is at least matching it by sounds of what you've said.

For retirement, it's absolutely an approved pension plan you should be considering because of the tax benefits not available with anything else. Do you understand the tax benefits of a pension at least?

You've 2 things to save for now, college and your own retirement. Probably use 2 different plans for both of them.

Do a full financial review with an advisor/planner you get recommendations for from a trusted friend or family member, some advisors from banks will just try sell you plans and policies for commission.

Tell them your life story, tell them your future plans about everything in life not just these 2 aspects. A good planner will be able to piece everything together and do what's right for you while still making money, you can pay a fee instead of them just getting commission.

I did it myself for a number of years and it's a very rewarding job to work with people towards their goals, other colleagues were more interested in that week's commission but that's life, good and bad with everything. Amd since doing that job I have my own financial goals and plans, I know when I want to retire and what income I want when I retire. Start there and work backwards is a great thing to do if you can get your head around it, might take a few years for it to all click in place but get started and give yourself options while you figure it out.

2 semi celebrity advisors are Paul Merriman (ask Paul) and Eoin McGee but they're only famous because they run very successful companies doing exactly what I've mentioned above. They do good work in Instagram anyway that I have seen, I've yet to disagree much with anything either guy ever says.

Probably 2 plans for 1 different outcomes, potentially put it all in pension in certain circumstances if you would be happy to retire in 10 years also, but the outcome completely depends on what you want to do in 10.years with your work and also with your savings.

In short, come up with proper goals and a proper plan with the aid of someone that is skilled in this kind of thing, it's worth every penny you spend today.

Clo-Clo

https://www.boards.ie/discussion/comment/121929930#Comment_121929930

Yeah I think I will go with Eoin, I went to him before but never set up the call. I did get a guy a few years back, but it was more or less a tax review he done, took a couple of hundred quid and nothing else. Just said I had everything setup

In terms of the contributions, like what should it be at for someone in work 25 years? probably the main question, I thought it was ok but looking at it now seems low :-)

Geuze

https://www.boards.ie/discussion/2058343075/pension-advice

At what rate do you contribute to your work pension?

What is your employer's % contribution rate?

What is the fund value?

Buddy Bubs

https://www.boards.ie/discussion/comment/121930024#Comment_121930024

Honestly it's how long is a piece of string question. I don't know how much you earn now and I don't know what you want in the future and when you want to retire.

The rule of thumb is to try and retire with somewhere between 50 and 66% of your income when working so your quality of life stays the same. Hopefully your mortgage will be done and the kids flew the nest etc and you won't need anywhere as much income

Then it's what do you want retirement to look for you, will you be traveling the world with your new free time or are you happy going for a walk in the local park or volunteering, one of those costs a lot more than the other of course. Or do you want to sit in a pub like lots of retired men.

My father has a huge pension, very few bills nowadays and is struggling to spend it, he isn't living life to the full though he should be out and about enjoying it a bit more but he's sitting at home a lot, struggling to replace his working life now that he has free time, he's going to leave a lot of cash behind him but that's his choice, I'd prefer him to have an active retirement but he's stubborn..

So as you can see the variables are huge that's where I got the life story and goals part from, I could say 20% of income but that might be way below what you should be doing or way above what you can afford,I just wouldn't know without knowing you if that makes sense.

My own plan is to have the option to retire at 60, my mortgage will finish age 59 and I'm expecting 2 injections of one off money this year and next, so retirement still a long way away and the state pension won't kick in for 6 or 7 years after that so I'm planning on having my own money saved for retirement. If I'm healthy I probably won't retire at 60 fully but retire from the high pressure job I'm in at the moment and so something easier like driving for a few years.

I'll review my plan every year though. And I cut out stupid spending and change electricity, gas etc every year for best deals, all part of planning..

Sono

Pensions are the most cost effective way to save money, I pay 10% and employer 10% also, ideally would like to max out contributions but not sure I could commit to that just yet.

The big issue is not being able to access that money until you’re 50(25% tax free, once only) if I’m not mistaken so then you need to save somewhere else if you can too, minimal interest but at least you can access for college or whatever else you face financially.

I would hope that later in life I’ll be able to put a couple of lump sums into my pension as I I’m in my 50’s perhaps.

If you can afford to increase pension contributions and maintain a decent savings account somewhere I don’t think you really need a financial advisor myself.

JVince

Pensions are certainly one of the best options, but like insurance or anything else, if you do not review then regularly you can lose out substantially and many pension plans sit in a very boring and far too safe fund that has very little growth.

Find your risk level - 1 - 6 (1 is cash deposits, 6 is all equity) and then find a fund or a couple of funds that the pension provider has available. Advice of a financial broker can be good in this case.

eg

in Zurich funds, the relatively safe Prisma 2 fund (risk 3) has grown 6% in the past 12 months, but the riskier (risk 6) 5 Star Americas fund has grown 42% as US tech which it is heavily invested in has soared in value.

You can request a split between funds and have 33% in safe, 33% in moderate and 33% in higher risk if you wish.

You also need to understand that you are looking at a full life timeframe. too many think pension funds mature when you are 65/66. That is wrong. That is the date they start paying out. For me, the time frame you look at is the mid point of the average # years you expect to live after commencing payout - so at 58, I'm looking at 85 as a reasonable life expectancy, thus 75 (17 years horizon) when I'm investing