Why are people obsessed with getting a pension

Jim2007 · 12-03-2020 5:16am

MicktheMan wrote: »

This gives an overall gross average annualised return of 95% and nett return north of 50% at the time on a so called 15% gross discount:)

Right so according to you, if an employee had an had a salary of 10k, they'd be entitled to buy shares with a face value of 1k at a discount of 15%, on disposal that offers up the first 150 of your supposed 95%, so where does the remaining 80% come from then?

You do realize that when we calculate annualized returns, our clients actually expect that they exist.... The very best you can do over a 12 month period is use 500 euro to generate 150 euro or 30%.

The only compounding that is going on here is all in your head. Nobody is paying out the extra 80% you are coming up with.

MicktheMan · 12-03-2020 10:23am

Jim2007 wrote: »

The only compounding that is going on here is all in your head. Nobody is paying out the extra 80% you are coming up with.

So, explain this to me then.

Taking the scenario of being paid fortnightly, putting 10% of gross pay into the saving scheme and being able to purchase company stock at a 15% discount. Gross annual salary is 26k so gross fortnightly salary is 1k, so 100 euro being saved into the scheme every 2 weeks.

The last payment into the scheme will be 100 euros. This is in the scheme for only 2 weeks until it is repaid with a 15% premium (you sell straight away) so you get 115 back.

What percentage rate do you need to get from a bank to achieve the same return in 2 weeks?

MicktheMan · 12-03-2020 10:31am

Jim2007 wrote: »

You do realize that when we calculate annualized returns, our clients actually expect that they exist.... The very best you can do over a 12 month period is use 500 euro to generate 150 euro or 30%.

I used annualised returns in order to compare the cost versus the opportunity.
My whole point from the start of this discussion is about the affordability of taking full advantage of the offer on the table. I.e. many think that they can't afford to put the full 10% away. My point being that they can't afford not to.

Bass Reeves · 12-03-2020 10:35am

The calculations is quite simple. The total money is saved for an average of 13 week. The return is 15% if sold at purchase price. So annualised return is 60%. However taking selling costs, buy/sell bid differentials, share account maintenance the return is 52-58%bracket

Jim2007 · 12-03-2020 1:40pm

MicktheMan wrote: »

I used annualised returns in order to compare the cost versus the opportunity.
My whole point from the start of this discussion is about the affordability of taking full advantage of the offer on the table. I.e. many think that they can't afford to put the full 10% away. My point being that they can't afford not to.

You cannot use a compounding calculation where the gain is unreasonable. It's one of the basic rules set out by the CFA for calculating performance. The maximum you could have achieved on a 10k salary back in those days of the is 150 pounds, you might be able to make an argument for recycling the 500 pound from the first six months, but that is it.

The bottom line is that if you can't show a bank account with an extra 900+ in it at the end of the year, you can't claim to have achieved it.

MicktheMan · 12-03-2020 5:03pm

Jim2007 wrote: »

You cannot use a compounding calculation where the gain is unreasonable. It's one of the basic rules set out by the CFA for calculating performance. The maximum you could have achieved on a 10k salary back in those days of the is 150 pounds, you might be able to make an argument for recycling the 500 pound from the first six months, but that is it.

The bottom line is that if you can't show a bank account with an extra 900+ in it at the end of the year, you can't claim to have achieved it.

Jim2007, I think you might be missing the whole and only point I'm trying to make. That point being that the return from the scheme was overall far superior to the cost of debt (even credit card debt) used to participate in the scheme. End of. I don't believe I have made any claim to any amount being in any bank account at the end of any period.

I'm not a financial analyst btw nor do I work in the industry, so forgive my terminology errors and lack of knowledge on what a CFA is.:)

Suppose you cannot afford to forego any of your salary never mind 10%. So you use your credit card with an interest rate of 20% to finance the full 10%. And for sake of argument 10% represents 100 euro and by way of illustration we'll concentrate on the last fortnightly payday before the close of the 6 months. So on one hand you go into debt on your cc by 100 euro and 100 euro goes into the scheme. 2 weeks later you get 115 euro back from the scheme and you immediately pay down the cc debt plus interest (100+0.72). So profit of 14.28. For clarity I've ignored taxes, transaction costs etc. (Similar calcs can be done for the other paydays in the cycle also with positive results)
This is the only point I'm trying (and failing by the looks of things:o) to make i.e. there is no such thing really of not been able to afford to participate in what is essentially a free money scheme.

Jim2007 · 12-03-2020 6:14pm

MicktheMan wrote: »

This is the only point I'm trying (and failing by the looks of things:o) to make i.e. there is no such thing really of not been able to afford to participate in what is essentially a free money scheme.

You started out in the believe that you'd made an annualized return of 95% and that there was lots of free money on offer... and you are still trying to pick the figures to back that up....

The reality is that that there was a 150 pounds gross on the table to a worker with an annual salary of 10,000 pounds and after taxes at their top rate a chunk was gone and if they borrowed a further chunk on interest... then depending on particular scheme, some had broker fees and admin expenses, so not, so may be another chunk gone. In the end there was a little free money on the table, not anything like the figure you imagined.

Now I have no intention of following you down the rabbit hole, you are on your own there.

Thisonedone · 12-03-2020 8:22pm

8 years of stock market gains now wiped out in a week. Those with pensions have no control over their own money and can only look on and weep. If only they had of put the money into stocks directly instead of a pension they could of sold out weeks ago when it was clear what was going on. Wonder is this the final nail in the coffin for the pension industry?

The J Stands for Jay · 12-03-2020 8:24pm

Thisonedone wrote: »

8 years of stock market gains now wiped out in a week. Those with pensions have no control over their own money and can only look on and weep. If only they had of put the money into stocks directly instead of a pension they could of sold out weeks ago when it was clear what was going on. Wonder is this the final nail in the coffin for the pension industry?

What kind of oddball pension doesn't let you sell out of equities?

Yellow_Fern · 13-03-2020 6:25am

bilbot79 wrote: »

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

I always encourage pensions, but pensions are not tax free. Pensions are not taxed as they grow and you have the tax free lump size option but aside from that they are taxed when you use them just like anyother income.

13-03-2020 9:43am

Thisonedone wrote: »

8 years of stock market gains now wiped out in a week. .........

S&p500 was this low back in Dec 2018.

Thisonedone wrote: »

.......Those with pensions have no control over their own money and can only look on and weep. If only they had of put the money into stocks directly instead of a pension they could of sold out weeks ago when it was clear what was going on. Wonder is this the final nail in the coffin for the pension industry?

Daftest load of sh1t I've read in a while.

Henry Ford III · 13-03-2020 11:09am

Yellow_Fern wrote: »

I always encourage pensions, but pensions are not tax free. Pensions are not taxed as they grow and you have the tax free lump size option but aside from that they are taxed when you use them just like anyother income.

Don't forget about tax relief on premiums.

Steer55 · 15-03-2020 2:17pm

Henry Ford III wrote: »

Don't forget about tax relief on premiums.

Heard talk on radio earlier about emergency budget within couple weeks, expect major major changes to tax system, money has to be raised to pay for the unprecedented effects of what's unfolding in our country. Hundreds and thousands of people are about to become unemployed.

Squozen · 22-03-2020 1:55pm

Thisonedone wrote: »

8 years of stock market gains now wiped out in a week. Those with pensions have no control over their own money and can only look on and weep. If only they had of put the money into stocks directly instead of a pension they could of sold out weeks ago when it was clear what was going on. Wonder is this the final nail in the coffin for the pension industry?

This dip will be a distant memory in five years, and nobody who needs the money to retire on within five years should be all-in on equities if they are relying on their pension as their main/only source of income.

I kept putting as much as I could into my pension during the GFC and it's worked out very well for me.

christy G · 05-04-2020 1:46pm

Hi I'm 28 and dont no much about pensions, I'm looking to start saving now . Should I open up my own penison scheme and put money in each month ?

Or I could put In 14k now straight away would it build up over 30 years if I just left it in it ?

I have an apartment rented out which I get 1200 a month from that is going to pay off my mortgage when my partner and I decide to build or buy new .

Thanks for your advice in advance.

GreeBo · 05-04-2020 3:32pm

christy G wrote: »

Hi I'm 28 and dont no much about pensions, I'm looking to start saving now . Should I open up my own penison scheme and put money in each month ?

Or I could put In 14k now straight away would it build up over 30 years if I just left it in it ?

I have an apartment rented out which I get 1200 a month from that is going to pay off my mortgage when my partner and I decide to build or buy new .

Thanks for your advice in advance.

If you are still paying a mortgage on that apartment then use the 14k on that instead

Bass Reeves · 05-04-2020 4:03pm

christy G wrote: »

Hi I'm 28 and dont no much about pensions, I'm looking to start saving now . Should I open up my own penison scheme and put money in each month ?

Or I could put In 14k now straight away would it build up over 30 years if I just left it in it ?

I have an apartment rented out which I get 1200 a month from that is going to pay off my mortgage when my partner and I decide to build or buy new .

Thanks for your advice in advance.

It unlikly you would have 14K in higher tax band income. However you could look at your 2019 tax year income and see how much you paid at the top tax rate. You can pay that amount into a pension and recover the tax from 2019 tax year before October. You can repeat this as often as necessary to put money into you pension tax efficient.

For example if you paid tax on 10K in 2019 at the 40% rate and put that amount into your pension you would receive 4K back in tax. So you would still have 8K left in savings. Next year if you repeated the exact same amount you put 8K + 2K(I say borrowings but it may just be using an over draught) into your fund you receive 4K back leaving a 2K in savings. You have now put 20K into the pension fund and you have 2K in savings. Make your money work for you.

Finally I generally never worry about mortgage payments it is the cheapest money you ever borrow, it car loans, holiday borrowings , paying insurance and car tax in installments etc that ruins wealth creation. Finally if you can build or buy without selling the apartment down the line consider it.

christy G · 05-04-2020 8:28pm

Bass Reeves wrote: »

It unlikly you would have 14K in higher tax band income. However you could look at your 2019 tax year income and see how much you paid at the top tax rate. You can pay that amount into a pension and recover the tax from 2019 tax year before October. You can repeat this as often as necessary to put money into you pension tax efficient.

For example if you paid tax on 10K in 2019 at the 40% rate and put that amount into your pension you would receive 4K back in tax. So you would still have 8K left in savings. Next year if you repeated the exact same amount you put 8K + 2K(I say borrowings but it may just be using an over draught) into your fund you receive 4K back leaving a 2K in savings. You have now put 20K into the pension fund and you have 2K in savings. Make your money work for you.

Finally I generally never worry about mortgage payments it is the cheapest money you ever borrow, it car loans, holiday borrowings , paying insurance and car tax in installments etc that ruins wealth creation. Finally if you can build or buy without selling the apartment down the line consider it.

Thanks for your advice, yeah that the plan I dont want to sell it would prefer to rent.

Should I own my own penison scheme and pay into that each month not sure where to start just start looking a few companys up ? Also how safe Is your money in your own penison scheme?

dotsman · 06-04-2020 7:22pm

GreeBo wrote: »

If you are still paying a mortgage on that apartment then use the 14k on that instead

Why on earth would you recommend that?

Overpaying a mortgage would be far down the list of priorities for 99% of people and without knowing more, is extremely likely to be terrible financial advice.

Christy, what is your current employment situation and income? If you are employed, your employer will have a pension scheme, so that should be your first port of call with regards looking in to pension options.

And while you should definitely be putting money in to a pension, it is important to keep at least some money in emergency savings (the past month being a very good example of why). For pensions, when in steady/regular employment, the main thing is the regular contributions (a percent of your salary) and build it up over the years. While it may be of benefit to kickstart a pension with a small portion of the 14K, I would recommend keeping a good chuck of that in easy-access emergency savings. Especially when you have an investment property (imagine, for example, if your tenants stopped paying rent next month; it could take months, even a year to evict them - how would you cover the mortgage repayments while waiting to evict them and find new tenants? etc)

snoopboggybog · 06-04-2020 7:46pm

I'm currently putting in what my employer matches 6%.

I definitely won't be increasing it as have to wait 30 years for it.

I'm saving money regardless outside of the pension but don't understand people trying to max it out with as much as they can at a young age.

Live your life for now, not for retirement.

Yellow_Fern · 06-04-2020 9:31pm

dotsman wrote: »

Why on earth would you recommend that?

Overpaying a mortgage would be far down the list of priorities for 99% of people and without knowing more, is extremely likely to be terrible financial advice.

Christy, what is your current employment situation and income? If you are employed, your employer will have a pension scheme, so that should be your first port of call with regards looking in to pension options.

And while you should definitely be putting money in to a pension, it is important to keep at least some money in emergency savings (the past month being a very good example of why). For pensions, when in steady/regular employment, the main thing is the regular contributions (a percent of your salary) and build it up over the years. While it may be of benefit to kickstart a pension with a small portion of the 14K, I would recommend keeping a good chuck of that in easy-access emergency savings. Especially when you have an investment property (imagine, for example, if your tenants stopped paying rent next month; it could take months, even a year to evict them - how would you cover the mortgage repayments while waiting to evict them and find new tenants? etc)

Assuming you have a roughly six month emergency fund many and maybe most advisors would say pay off your mortgage. Its very conservative advice but very safe advice too.

GreeBo · 06-04-2020 9:41pm

dotsman wrote: »

Why on earth would you recommend that?

Overpaying a mortgage would be far down the list of priorities for 99% of people and without knowing more, is extremely likely to be terrible financial advice.

Christy, what is your current employment situation and income? If you are employed, your employer will have a pension scheme, so that should be your first port of call with regards looking in to pension options.

And while you should definitely be putting money in to a pension, it is important to keep at least some money in emergency savings (the past month being a very good example of why). For pensions, when in steady/regular employment, the main thing is the regular contributions (a percent of your salary) and build it up over the years. While it may be of benefit to kickstart a pension with a small portion of the 14K, I would recommend keeping a good chuck of that in easy-access emergency savings. Especially when you have an investment property (imagine, for example, if your tenants stopped paying rent next month; it could take months, even a year to evict them - how would you cover the mortgage repayments while waiting to evict them and find new tenants? etc)

Because the poster said they have 14k that they want to put into a pension. If you are paying a mortgage I'd seriously consider paying off mortgage instead of a pension. Depending on their age and salary they won't get 14k in an avc anyway

I'm also assuming that the 14k is disposable income and not their only funds, otherwise neither mortgage or pension is appropriate and it should be in cash.

WhatsGoingOn2 · 06-04-2020 10:33pm

christy G wrote: »

Hi I'm 28 and dont no much about pensions, I'm looking to start saving now . Should I open up my own penison scheme and put money in each month ?

Or I could put In 14k now straight away would it build up over 30 years if I just left it in it ?

I have an apartment rented out which I get 1200 a month from that is going to pay off my mortgage when my partner and I decide to build or buy new .

Thanks for your advice in advance.

Offset your tax bill at the end of the year by paying into your pension using as much of the 14k as necessary, repeat next year with whatever is left.

Bass Reeves · 06-04-2020 10:34pm

WhatsGoingOn2 wrote: »

Offset your tax bill at the end of the year by paying into your pension using as much of the 14k as necessary, repeat next year with whatever is left.

You can offset 2019 tax and get it back straight away. But you should only do it at the higher tax rate

donkey balls · 02-05-2020 3:59pm

snoopboggybog wrote: »

I'm currently putting in what my employer matches 6%.

I definitely won't be increasing it as have to wait 30 years for it.

I'm saving money regardless outside of the pension but don't understand people trying to max it out with as much as they can at a young age.

Live your life for now, not for retirement.

I started paying AVC in to my pension when I was in my early 20s, OK I was still living in mammy and daddy house at the time.
I could afford to pay the extra 10% AVC at the time and I looked at it from another angle that its better in my savings than dead money to revenue.
I left the company I was working for in 03 but left the pension in the scheme, I never had a pension since then untill 2016 and I'm ploughing the money into additional AVC as I can afford to now.
But during the last economic downturn a pension was the last thing on my mind,As I was made redundant and ended up doing zero hour agency work for nearly 4 years.
If people can afford to put extra into a pension fund imo they should better to have it later on in live than never see it again.

donkey balls · 02-05-2020 4:02pm

snoopboggybog wrote: »

I'm currently putting in what my employer matches 6%.

I definitely won't be increasing it as have to wait 30 years for it.

I'm saving money regardless outside of the pension but don't understand people trying to max it out with as much as they can at a young age.

Live your life for now, not for retirement.

I started paying AVC in to my pension when I was in my early 20s, OK I was still living in mammy and daddy house at the time.
I could afford to pay the extra 10% AVC at the time and I looked at it from another angle that its better in my savings than dead money to revenue.
I left the company I was working for in 03 but left the pension in the scheme, I never had a pension since then untill 2016 and I'm ploughing the money into additional AVC as I can afford to now.
But during the last economic downturn a pension was the last thing on my mind,As I was made redundant and ended up doing zero hour agency work for nearly 4 years.
If people can afford to put extra into a pension fund imo they should better to have it later on in live than never see it again.

snoopboggybog · 03-05-2020 6:06am

donkey balls wrote: »

I started paying AVC in to my pension when I was in my early 20s, OK I was still living in mammy and daddy house at the time.
I could afford to pay the extra 10% AVC at the time and I looked at it from another angle that its better in my savings than dead money to revenue.
I left the company I was working for in 03 but left the pension in the scheme, I never had a pension since then untill 2016 and I'm ploughing the money into additional AVC as I can afford to now.
But during the last economic downturn a pension was the last thing on my mind,As I was made redundant and ended up doing zero hour agency work for nearly 4 years.
If people can afford to put extra into a pension fund imo they should better to have it later on in live than never see it again.

30 years is a long wait, I'd rather an extra 400 in my pocket now than increasing it to like 15%.

Each to their own really but maxing out your pension early is pointless.

Live life for now. I'll still have a nice lump sum to live whereever i want

Jim2007 · 03-05-2020 9:27am

snoopboggybog wrote: »

30 years is a long wait, I'd rather an extra 400 in my pocket now than increasing it to like 15%.

Each to their own really but maxing out your pension early is pointless.

Well it is not 15%, it was a little over 769% in my case and if you thing being able to get out in your early fifties to do things that interest you, rather than having to trudge into work each day is pointless... well I guess it's up to you what you want to do with your time...

snoopboggybog wrote: »

Live life for now. I'll still have a nice lump sum to live whereever i want

Except you're 'nice lump sum' will be a lot less than it would be if you'd saved it through a pension vehicle. And more than likely by then pension reform will have happened by then and there will be a bigger reliance on private pensions and saving, just as there is in other EU/EEA/CH countries who have already gone a head with the 3 Pillar System.

And of course none of us is guaranteed a full working life in which to build up savings... which might mean a very frugal existence.

Squozen · 03-05-2020 9:51am

Jim2007 wrote: »

Well it is not 15%, it was a little over 769% in my case and if you thing being able to get out in your early fifties to do things that interest you, rather than having to trudge into work each day is pointless... well I guess it's up to you what you want to do with your time...

Yep, the money you put into a pension immediately gives you a 20-40% return because you get a tax credit on it.

Between my personal contribution and my company adding some on top, I'm putting €687 a month into my pension and it's only costing me €275 after tax. That's a 150% return on day one.

If you actually sit down and do the sums I don't understand how people can be arguing against this. But I don't mind if you want to work until you're 68 and end up on a €13k state pension, no skin off my nose.

snoopboggybog · 03-05-2020 10:08am

Jim2007 wrote: »

Well it is not 15%, it was a little over 769% in my case and if you thing being able to get out in your early fifties to do things that interest you, rather than having to trudge into work each day is pointless... well I guess it's up to you what you want to do with your time...

Except you're 'nice lump sum' will be a lot less than it would be if you'd saved it through a pension vehicle. And more than likely by then pension reform will have happened by then and there will be a bigger reliance on private pensions and saving, just as there is in other EU/EEA/CH countries who have already gone a head with the 3 Pillar System.

And of course none of us is guaranteed a full working life in which to build up savings... which might mean a very frugal existence.

You can't draw on your pension I thought till 60? So I'm gessing here is living off your normal savings from 50 to 60 and then get your pension?

It actually makes sense to me that way. I'm currently saving 1200 a month on top of my 6% contribution which my employer matches.

I'm new to all this so any advice is greatly appreciate even though I'm 30.

The J Stands for Jay · 03-05-2020 10:10am

snoopboggybog wrote: »

Each to their own really but maxing out your pension early is pointless.

Maxing out your pension early is the best way. You could pay in for maybe 5 years, and still do much better than someone who maxed the last 10 years of their employment.

Jim2007 · 03-05-2020 10:12am

Squozen wrote: »

But I don't mind if you want to work until you're 68 and end up on a €13k state pension, no skin off my nose.

Well unfortunately that is not so, there is a social aspect to it as well...

The state pension system is a pay as you go model, which with an ageing population is not sustainable, so if people don't start to provide for their own retirement then then 'haves' will have to pay for the 'have nots' in term of pension taxation, less services etc....

That is why the 'second pillar' - company pension is become mandatory in most Europe countries now, much like auto enrolment in Ireland.

Yellow_Fern · 03-05-2020 10:15am

Squozen wrote: »

Yep, the money you put into a pension immediately gives you a 20-40% return because you get a tax credit on it.

Between my personal contribution and my company adding some on top, I'm putting €687 a month into my pension and it's only costing me €275 after tax. That's a 150% return on day one.

If you actually sit down and do the sums I don't understand how people can be arguing against this. But I don't mind if you want to work until you're 68 and end up on a €13k state pension, no skin off my nose.

I guess you mean 15-40% return right. No doubt that the pension is well worth doing for all ages and you should start as soon as possible. However it is not quite a 15-40% return because it is mostly taxed at the other end as income and then is the issue of fees.

snoopboggybog · 03-05-2020 10:17am

Any advice on my 6% and my employer matching and want to retire at 50. I'm currently saving 1200 a month which i have going into a bank of ireland savings account.

Squozen · 03-05-2020 10:30am

Yellow_Fern wrote: »

I guess you mean 15-40% return right. No doubt that the pension is well worth doing for all ages and you should start as soon as possible. However it is not quite a 15-40% return because it is mostly taxed at the other end as income and then is the issue of fees.

No, it's much higher than 15-40% after 40 years of investment. Putting in €687 and getting an 8% net return over 40 years gives me just shy of €17,000. Even counting inflation that's insane.

And it is not 'mostly taxed at the other end as income'. Only interest/dividends on the invested sum after retirement count as taxable income, not the sum itself.

https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_pension_assets/

AndrewJRenko · 03-05-2020 10:33am

snoopboggybog wrote: »

Any advice on my 6% and my employer matching and want to retire at 50. I'm currently saving 1200 a month which i have going into a bank of ireland savings account.

If your employer is offering to match your contribution, that is an immediate 100% return on your investment, before you even look at the tax saving. If you're leaving any opportunity for employer matching on the table, you're a fool, financially speaking.

Squozen · 03-05-2020 10:33am

snoopboggybog wrote: »

Any advice on my 6% and my employer matching and want to retire at 50. I'm currently saving 1200 a month which i have going into a bank of ireland savings account.

Look at a good index fund ETF. Putting the money into the bank is actually losing you money over time once inflation is factored in.

I am planning to retire at 60 (currently 46) and start drawing on my pensions at 65, so I only need to have enough in normal investments to last me five years. As you're 30, you need to invest enough over 20 years to last 10. Do you have a mortgage?

The J Stands for Jay · 03-05-2020 10:38am

snoopboggybog wrote: »

You can't draw on your pension I thought till 60? So I'm gessing here is living off your normal savings from 50 to 60 and then get your pension?

It actually makes sense to me that way. I'm currently saving 1200 a month on top of my 6% contribution which my employer matches.

I'm new to all this so any advice is greatly appreciate even though I'm 30.

Occupational pension schemes allow you to draw down at 50.

AndrewJRenko · 03-05-2020 10:45am

McGaggs wrote: »

Occupational pension schemes allow you to draw down at 50.

Provided that you have left that employment.

snoopboggybog · 03-05-2020 11:03am

Squozen wrote: »

Look at a good index fund ETF. Putting the money into the bank is actually losing you money over time once inflation is factored in.

I am planning to retire at 60 (currently 46) and start drawing on my pensions at 65, so I only need to have enough in normal investments to last me five years. As you're 30, you need to invest enough over 20 years to last 10. Do you have a mortgage?

No But I'm in the US at the minute and paying into the pension over here at the minute, same as when i was back in Ireland.

When i was in Ireland I was living with friends paying 250 euro for a room. I don't need a mortgage. I am single and plan on staying that way. (It might sound morbid but I have one parent left at 70 and will inherit the house).

What I'm thinking of doing is:

Retire at 50: Should have 380K saved
At 60: Hit the pension.

Squozen · 03-05-2020 11:14am

snoopboggybog wrote: »

No But I'm in the US at the minute and paying into the pension over here at the minute, same as when i was back in Ireland.

When i was in Ireland I was living with friends paying 250 euro for a room. I don't need a mortgage. I am single and plan on staying that way. (It might sound morbid but I have one parent left at 70 and will inherit the house).

What I'm thinking of doing is:

Retire at 50: Should have 380K saved
At 60: Hit the pension.

I have one parent left at 74 and agree, it doesn't sound great but you do have to factor an inheritance into your planning.

If you invest instead of using the bank you should end up with significantly more than €380k - closer to €700k (which would be around €470k in today's money). Have you taken inflation into account for your calculations? At 2% per annum inflation, €380k in 2040 is worth the equivalent of €255k.

03-05-2020 11:40am

AndrewJRenko wrote: »

Provided that you have left that employment.

For folk planning on retiring that's likely no problem.

TK Lemon · 03-05-2020 11:50am

Hi everyone,

My OH, Mr Lemon is 28 going on 29 . He has been in a defined contribution pension scheme in his current place of work since 2018 when he was 27.

If I'm not mistaken, tax refunds and tax credits are claimable for up to four years.

Is it possible to make a retrospective AVC contribution to his current provider for former employment in 2016 and 2017 and claim the tax relief immediately?

Squozen · 03-05-2020 11:52am

TK Lemon wrote: »

Is it possible to make a retrospective AVC contribution to his current provider for former employment in 2016 and 2017 and claim the tax relief immediately?

I think you'd be best off asking Revenue directly. You can submit an enquiry online.

maestroamado · 03-05-2020 11:57am

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.

I just came across this thread now.

In was at a conference a few years ago and this is what happened.
One of my former collegues asked the Human Resorces Director who was doing a presentations on AVCs advanced contributions.
He asked.
Because i joined the company later on i would like to have same lifestyle when i retire.
Reply name, the reality is most people retire at 65 and of those people 20% will not be around at 70.
of these people 25% will not be around at 75.... shall i continue... No...

Personally i think a lot of pension schemes are pretty dodgy.
I think it will be compulsory to have a private pension in the next 5/10 years. The trick is not to put too much in as if you save tax going in and invest too much you pay tax taking out.
I would be inclined to have a pension of a min of €100 and up to €150pw.
That would be an income of nearly €400 in today's terms and with no debt live very comfortable and have a holiday.

Padre_Pio · 03-05-2020 12:14pm

maestroamado wrote: »

I just came across this thread now.
Reply name, the reality is most people retire at 65 and of those people 20% will not be around at 70.
of these people 25% will not be around at 75.... shall i continue... No...

I'm in my mid 30s. I don't know what the retirement age will be in 30 years, but equally I don't know what the expected life will be in 30 years.

People dying at the average life expectancy of 82 were born when Mr. Hitler was annexing Austria. When they were my age the life expectancy was 68.

It's silly to plan future events based on current state of affairs. We could all be living to 100 in 30 or 40 years time.

snoopboggybog · 03-05-2020 12:16pm

So canyone recommend what i should do?

Squozen · 03-05-2020 12:25pm

maestroamado wrote: »

Personally i think a lot of pension schemes are pretty dodgy.

Cool story, bro.

I think it will be compulsory to have a private pension in the next 5/10 years. The trick is not to put too much in as if you save tax going in and invest too much you pay tax taking out.

Untrue. Do some research before coming onto a forum and spouting nonsense.

https://www.pensionsauthority.ie/en/lifecycle/tax/

If you put in too much you don't get tax relief on the excess.

You will get taxed at 40% for any amount over €2,000,000 in your pension, and I'd love to have that 'problem'.

I would be inclined to have a pension of a min of €100 and up to €150pw.
That would be an income of nearly €400 in today's terms and with no debt live very comfortable and have a holiday.

€400 a month is comfortable? Are you having a laugh?

Squozen · 03-05-2020 12:25pm

snoopboggybog wrote: »

So canyone recommend what i should do?

Several of us have recommended what you should do. Speak to a financial advisor if you want further confirmation.

snoopboggybog · 03-05-2020 12:40pm

Squozen wrote: »

Several of us have recommended what you should do. Speak to a financial advisor if you want further confirmation.

No they havn't

Why are people obsessed with getting a pension

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