Retirement.

Tigerandahalf

How are private pension funds provided for?
Do they depend on young workers contributing or is the money holed up in sound investments and guaranteed to be returned year on year in retirement?

howamidifferent

howamidifferent wrote: »

Jammy Git! Good luck with that! 12 more years for me...unless I win the lotto then I'm gone never again to darken the door of my place of employment.

If they're paid monthly that's 14 years.....

ytpe2r5bxkn0c1

Tigerandahalf wrote: »

How are private pension funds provided for?
Do they depend on young workers contributing or is the money holed up in sound investments and guaranteed to be returned year on year in retirement?

Your contributions and your employers contributions on your behalf, fund your pension. They do not depend on younger workers contributing.

Barry Badrinath

[Deleted User] wrote: »

If they're paid monthly that's 14 years.....

3yrs 1month

Boom!

Tigerandahalf

Dominik Important Busboy wrote: »

Your contributions and your employers contributions on your behalf, fund your pension. They do not depend on younger workers contributing.

But how can you live on a pension based on just your emoloyer and employee contributions. You would have to be contributing for a hell of a long time and the fund would have to be performing very well.

I can't see how people can retire in their 50s based on just employee/employer contributions unless of course it is a defined benefit one. How is that sustainable?

Senor Fancy Pants

Senor Fancy Pants wrote: »

3yrs 1month

Boom!

Grats

I have 766 paydays left.

I don't mind that so much, the fortnight between them is a real b1tch tho

Permabear

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edireland

What you said is so true.
Unfortunately I had to retire early.

Tigerandahalf

Permabear wrote: »

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Depends on your mindset. My father worked upto his 80s but was self employed. He had no hobbies as such and couldn't sit down for more than an hour before needing to be at it again.
Retirement for him wouldn't have been fun. He loved working. A lot of people seem to be happy staying that way.

A lot depends on whether you are in control and can decide on how much/little you need to work. One can be lucky that way.

ytpe2r5bxkn0c1

Permabear wrote: »

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I find that kind of sad. There are many ways to find challenges and more to focus on than work. You can be mentally active in many many ways. I loved my work and found it constantly stimulating, invigorating, and enjoyable but I found all those things in other ways when I retired at 54. I also discovered that, while I was totally unaware of it at the time, I was under stress at work. I have never been as active, healthy, stimulated or relaxed as during my retirement. I enjoy every day of it and, admittedly, to my own surprise don't miss the day job in the slightest. I certainly haven't lost my edge and constantly take on projects and challenges that have educated me in areas I knew little of when focused solely on the skills and abilities required for my job.

server down

Dominik Important Busboy wrote: »

I find that kind of sad. There are many ways to find challenges and more to focus on than work. You can be mentally active in many many ways. I loved my work and found it constantly stimulating, invigorating, and enjoyable but I found all those things in other ways when I retired at 54. I also discovered that, while I was totally unaware of it at the time, I was under stress at work. I have never been as active, healthy, stimulated or relaxed as during my retirement. I enjoy every day of it and, admittedly, to my own surprise don't miss the day job in the slightest. I certainly haven't lost my edge and constantly take on projects and challenges that have educated me in areas I knew little of when focused solely on the skills and abilities required for my job.

No offence but that sounds like you had a cushy job in some public sector. You might well be retired for as long as you worked. We clearly can’t all afford that.

tayto lover

I retired but went back part-time and only work for about 12 hours a week.
I play golf on Tuesdays, Thursdays and Sundays if the weather permits.
I go hill walking too and try to keep myself active.
I also volunteer with the local ETB teaching adults to read, help out in a soup kitchen from time to time and do a bit of gardening.
I take a few City Breaks as I like to travel now. Was afraid of flying years ago.

I don't know how I found time to work for all those years.
There's a great life after you retire OP.

Tigerandahalf

Tigerandahalf wrote: »

I can't see how people can retire in their 50s based on just employee/employer contributions unless of course it is a defined benefit one. How is that sustainable?

Often, it isn't.

A modest annual pension of €45,000 will require well over €2 million euro in investments.

I'm hoping to get a public service job in the next few years. I have a pension, but would never be able to save for a really comfortable pension based on mine & my employer's contributions alone.

ytpe2r5bxkn0c1

server down wrote: »

No offence but that sounds like you had a cushy job in some public sector. You might well be retired for as long as you worked. We clearly can’t all afford that.

Completely wrong. I was Private Sector and worked long and hard at it for 35 years. I can afford it because I planned, saved, worked my way up through the company and made sacrifices to make it happen. I saw my father die in his mid 50s after doing a thankless job that paid little and ruined his health and I swore I'd retire early to enjoy life, if I could.

Tigerandahalf

A Tyrant Named Miltiades! wrote: »

Often, it isn't.

A modest annual pension of €45,000 will require well over €2 million euro in investments.

I'm hoping to get a public service job in the next few years. I have a pension, but would never be able to save for a really comfortable pension based on mine & my employer's contributions alone.

Well our governments aren't helping by burying their heads in the sand and bribing the grey vote with pension increases when there clearly is no inflation in the cost of living.

Even with an employee/employer contribution of €100 a week that is only €5,000 a year. That is not going to go far in retirement.

Defined benefit people retiring in their 50s could be claiming a pension for longer than they worked. Someone is getting robbed blind.

Permabear

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ytpe2r5bxkn0c1

Permabear wrote: »

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Wait until the grandchildren arrive and you'll rush to retirement.

A man who retired many years before me told me "you'll just get to a point when retirement feels right for you - then you go".

A Tyrant Named Miltiades!

A Tyrant Named Miltiades! wrote: »

Often, it isn't.

A modest annual pension of €45,000 will require well over €2 million euro in investments.

I'm hoping to get a public service job in the next few years. I have a pension, but would never be able to save for a really comfortable pension based on mine & my employer's contributions alone.

Too late, the pension is knackered for anyone post 2014

Tigerandahalf

Tigerandahalf wrote: »

Defined benefit people retiring in their 50s could be claiming a pension for longer than they worked. Someone is getting robbed blind.

Well my Mum is still claiming a DB pension on behalf of my Dad, and he's dead 5 years

(no she's not a criminal, it's a private pension which pays for surviving spouses)

Pensions like this probably be long gone by the time I'm put to pasture, in 40-odd years. In fact they're already rare.

Tigerandahalf

But how are those private pensions funded once the person has stopped working?
20 years down the line where is the money coming from?
If it is in a fund how secure is it or are other younger colleagues propping it up with their contributions?

Tigerandahalf

Tigerandahalf wrote: »

But how are those private pensions funded once the person has stopped working?
20 years down the line where is the money coming from?
If it is in a fund how secure is it or are other younger colleagues propping it up with their contributions?

Defined-contribution funds, which are pretty much the only type of plan still available, place money in a wide variety of investments, and the value of the fund depends on the return on these investments.

So it's the financial markets that determine the gains and losses. Bank shares, property portfolios, government bonds -- things like that.

server down

A Tyrant Named Miltiades! wrote: »

Often, it isn't.

A modest annual pension of €45,000 will require well over €2 million euro in investments.

I'm hoping to get a public service job in the next few years. I have a pension, but would never be able to save for a really comfortable pension based on mine & my employer's contributions alone.

It would be hard to even get 45K on a public pension these days as it is a ratio of the average wage you earned during the service, not at the end..

(And in retirement that income is pretty good actually, you can't compare it to a time you are saving for a house, paying a mortgage, paying for kids, contributing to a pension itself, saving for college funds and then there is all the free stuff).

DEFTLEFTHAND

Think I'll be one of those die in the chair types. I could never envisage not working, I get bored.

server down

Dominik Important Busboy wrote: »

Completely wrong. I was Private Sector and worked long and hard at it for 35 years. I can afford it because I planned, saved, worked my way up through the company and made sacrifices to make it happen. I saw my father die in his mid 50s after doing a thankless job that paid little and ruined his health and I swore I'd retire early to enjoy life, if I could.

In a pervious post you said you worked on average 35 hours a week. You should really give a hint as to what you actually did, as I think we would all like a share of that pie.

ytpe2r5bxkn0c1

server down wrote: »

In a pervious post you said you worked on average 35 hours a week. You should really give a hint as to what you actually did, as I think we would all like a share of that pie.

Tough.

And what I posted was

Zero now that I'm retired. When I worked I was contracted for 35 per week but usually worked about 40 to 45 at busy times of the year. I rarely paid much attention to the clock or what my hours were adding up to, to be honest.

Never did I say, or did I work, an average of 35. But good stalking..

server down

server down wrote: »

It would be hard to even get 45K on a public pension these days as it is a ratio of the average wage you earned during the service, not at the end..

Yeah, that's true about the new calculations.

Well even a €20,000 annual pension (gross) would be at the lower end of public service pensions, yet would take a private saver about €800k to buy that very, very modest pension.

So while the benefits of the public service pensions have dropped in value, they're still a massive perk of the job.

On that note, off I trundle to publicjobs.ie

tayto lover

To those thinking of retiring I would just like to say that you do not need half as much money as you think. Take that fear factor out of the equation. I knew people who worried about that needlessly.

I had my mortgage paid and the kids educated to degree level. I had my loans paid because I saved and scrimped -- for the future. Once you have your major expenses (like above) paid then you can enjoy life.

ytpe2r5bxkn0c1

tayto lover wrote: »

To those thinking of retiring I would just like to say that you do not need half as much money as you think. Take that fear factor out of the equation. I knew people who worried about that needlessly.

I had my mortgage paid and the kids educated to degree level. I had my loans paid because I saved and scrimped -- for the future. Once you have your major expenses (like above) paid then you can enjoy life.

Very true.

I grossly over estimated what I'd need to retire on.

elperello

Dominik Important Busboy wrote: »

Very true.

I grossly over estimated what I'd need to retire on.

A man advised me about this some years ago.
He worked on into his early seventies.
He said he worried all his life about having enough after he retired.
He told me that he was no longer going anywhere much in the car so a fill of diesel lasted for ages. He couldn't drink much any more. He had all the gear he needed for his hobbies.
He said he would go down to the ATM and take out a couple of hundred and he thought he'd never get through it.

eeguy

elperello wrote: »

A man advised me about this some years ago.
He worked on into his early seventies.
He said he worried all his life about having enough after he retired.
He told me that he was no longer going anywhere much in the car so a fill of diesel lasted for ages. He couldn't drink much any more. He had all the gear he needed for his hobbies.
He said he would go down to the ATM and take out a couple of hundred and he thought he'd never get through it.

I found out recently my granddad doesn't have a bank card. He takes out a hundred euro every few weeks at the cash desk and that keeps him going grand.
He's very active but nothing he does costs money. Walking, cycling, hobbies, tipping around to see friends are all free. Doesn't care about new clothes or new cars. He's bought everything he'll ever need.

jimmycrackcorm

Heres Johnny wrote: »

I sold my house, moved into my then girlfriends house (wife now) and pocketed 100k in equity. Put most of this into a pension fund and the growth has been fantastic. It's going to give me the option to retire by mid 50s if I want. I was paying a pretty penny into it before the lump sum too. Seriously kids, put money away even if it's only a small amount.

If, instead of putting that 100k into your pension, you had taken the option of paying the maximum contributions from your monthly salary into your fund and used the 100k towards the reduced monthly earnings then your 100k would have added the money you would have paid in tax otherwise.

At the marginal rate your 100k would have added an additional 100k that would otherwise been PAYE tax.

Permabear

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Spanish Eyes

I took early retirement at 55. Great offer on the table for the wrinklies, so off I went.

But in fairness, I knew that my line of work would be offering such a deal three years before the offer, so I planned, and paid down debt and mortgage and emerged debt free and owning my own house.

I know it's not for everyone, but I haven't looked back.

I'm a lazy fecker, but I think it's ok to be lazy now. Have had a job since I was 13 (Saturday) and Summers (16). So I have worked practically since out of nappies lol!

Retirement is wonderful. You can be as active or as ridiculously lazy as you want.

I honestly think early or normal retirement suits introverts, I confess to being one of them. So I like my own company and don't need to always be Doing Things!

But am a member of a walking group, volunteer Tour Guide (great craic), travelling here and there outside the school breaks (so cheap), and keeping an eye on the old lady who is quite ill now will keep me from any harm!

Retirement will not cost you half what you think it will. There are too many websites out there saying you need millions in investments to maintain your lifestyle. You don't need that. Just enough to live on comfortably with a cusion for a rainy day.

We spent all our lives saving, no more.

Permabear

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ytpe2r5bxkn0c1

Permabear wrote: »

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That's the rub. While you need so much less in the way of funds when retired, it's because your mortgage is cleared a few years, kids raised and flown the nest etc. I was fortunate that all our kids were independent adults, and the mortgage was cleared more than 10 years (the mortgage money went to a retirement fund) and health insurance wasn't tied to employment. I now change the car every three years for a new one, travel as I wish, and can afford anything I want - but I found since I retired that I just don't seem to need as much for some reason.

Permabear

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Tigerandahalf

Dominik Important Busboy wrote: »

That's the rub. While you need so much less in the way of funds when retired, it's because your mortgage is cleared a few years, kids raised and flown the nest etc. I was fortunate that all our kids were independent adults, and the mortgage was cleared more than 10 years (the mortgage money went to a retirement fund) and health insurance wasn't tied to employment. I now change the car every three years for a new one, travel as I wish, and can afford anything I want - but I found since I retired that I just don't seem to need as much for some reason.

You are a lucky person. So are your generation.
Many young people will be in their mid 30s before they can afford to take out a mortgage - probably 35 year term. So they could be 70 before it is paid off. Just in time to retire!

Saying that many younger people have done a lot of the fun things like travelling when in their 20s, something that the older generations didn't have.

You would have to worry though about how sustainable the whole thing is. With more and more people in retirement or close to, what political party is going to grasp the nettle and start equalising the advantages the older generations have.

I see the Tories in the UK are looking towards putting the assets of the elderly towards their care instead of being passed onto their children on death.
Something will have to give.
Easy to see why the Germans were prepared to allow a million refugees in to bolster their lopsided system.

tayto lover

Tigerandahalf wrote: »

You are a lucky person. So are your generation.
Many young people will be in their mid 30s before they can afford to take out a mortgage - probably 35 year term. So they could be 70 before it is paid off. Just in time to retire!

Saying that many younger people have done a lot of the fun things like travelling when in their 20s, something that the older generations didn't have.

You would have to worry though about how sustainable the whole thing is. With more and more people in retirement or close to, what political party is going to grasp the nettle and start equalising the advantages the older generations have.

I see the Tories in the UK are looking towards putting the assets of the elderly towards their care instead of being passed onto their children on death.
Something will have to give.
Easy to see why the Germans were prepared to allow a million refugees in to bolster their lopsided system.

I lived and worked through the Recession in the 1980's.
People thought the country would never recover after it too. Then we had the current recession where many of the older citizens and people in business lost money that was in shares etc.
We always recover and things will always improve. Don't worry about it at all.

Steer55

Spanish Eyes wrote: »

I took early retirement at 55. Great offer on the table for the wrinklies, so off I went.

But in fairness, I knew that my line of work would be offering such a deal three years before the offer, so I planned, and paid down debt and mortgage and emerged debt free and owning my own house.

I know it's not for everyone, but I haven't looked back.

I'm a lazy fecker, but I think it's ok to be lazy now. Have had a job since I was 13 (Saturday) and Summers (16). So I have worked practically since out of nappies lol!

Retirement is wonderful. You can be as active or as ridiculously lazy as you want.

I honestly think early or normal retirement suits introverts, I confess to being one of them. So I like my own company and don't need to always be Doing Things!

But am a member of a walking group, volunteer Tour Guide (great craic), travelling here and there outside the school breaks (so cheap), and keeping an eye on the old lady who is quite ill now will keep me from any harm!

Retirement will not cost you half what you think it will. There are too many websites out there saying you need millions in investments to maintain your lifestyle. You don't need that. Just enough to live on comfortably with a cusion for a rainy day.

We spent all our lives saving, no more.

I totally agree with you. I dropped out of the workforce six months ago at age 54, never looked back, currently enjoying beautiful sunshine in the south of France and heading to Spain for the winter. Kids all grown up and moved on. I have enough funds to enjoy a comfortable retirement. I am so happy to have done this, sometimes I sit and think of all the years I slaved away for ungrateful employers often for peanuts. Never again, I am going to enjoy the rest of my life, travelling, learning new languages, staying healthy, reading and the feel good factor when I awake every morning to be out of the rat race is totally awesome.

Permabear

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tayto lover

Permabear wrote: »

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I worked for 44 years and paid my way. I deserve what I get now. I earned it.

maryishere

tayto lover wrote: »

I worked for 44 years and paid my way. I deserve what I get now. I earned it.

Quote "The pension paid to the average civil servant who retires at 60 with 40 years of service would cost a whopping €1.5 million if bought in the marketplace. On this basis the average civil servant could be classified as a millionaire."
https://www.irishtimes.com/news/politics/pensions-could-make-millionaires-of-civil-servants-1.2814021

I doubt you paid €1,500,000 towards your pension. Lucky you now all the same.
You are right to be smug.

Tigerandahalf

tayto lover wrote: »

I worked for 44 years and paid my way. I deserve what I get now. I earned it.

And that's why it will be so difficult to rein in the elderly vote. They can turn up and protest at their free will.

It is interesting to see the gov come in for stick in the budget re pension changes for people who opted out of the workforce back decades ago and are now losing out.

Obviously a decision was made in government circles/civil service about the need for pension reform and so they are well aware of the potential problems. It would be interesting to see what the long term plan is.

I have no problem with people getting a good sustainable pension.
But the younger generation have been really shafted to pay for it.

Dole cut in half for under 24s
All new public servants put on a lesser pay scale
A new average pension system for new entrants (even though existing people are allowed to stay on the old system)
Compulsory health insurance being pushed
Proposed compulsory pension system for young workers
10%/20% deposit required for mortgage
Huge public debt left by the older generation

The younger generation have been treated really poorly. I get that they don't vote and are not as clued in as the older voting public but there's going to be a lot of anger down the line.

We have seen in the uk how quick momentum can swing from a majority for 1 party to possibly the polar opposite in the near future.

Permabear

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Cody montana

When I turn 95, I'll worry about retirement.

Until then, Paaaaaaaarty!

tayto lover

maryishere wrote: »

Quote "The pension paid to the average civil servant who retires at 60 with 40 years of service would cost a whopping €1.5 million if bought in the marketplace. On this basis the average civil servant could be classified as a millionaire."
https://www.irishtimes.com/news/politics/pensions-could-make-millionaires-of-civil-servants-1.2814021

I doubt you paid €1,500,000 towards your pension. Lucky you now all the same.
You are right to be smug.

I wasn't a Civil / Public Servant.
I paid into my own pension.
I also paid all my taxes, levies etc.
I am not smug either just telling it as it is.

tayto lover

Permabear wrote: »

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I have private insurance. I paid 45 euro for a doctors visit recently and almost 100 for the prescription. I can claim some of it back though.
I also believe that Medical Cards have been granted far too easily. Means test them. I would curtail the number of doctors visits. Maybe cut it down to 1 per month. Personally I visit a doctor on average of twice a year.

maryishere

If it was a defined benefit pension then lucky you. If it was a defined contribution pension then unlucky you....I know some people who paid in to a pension and who are getting out less than they paid in. Best wishes all the same.

ytpe2r5bxkn0c1

Permabear wrote: »

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I don't. Indeed I feel so strongly regarding the unfairness of much of the system that I never applied for state pension, home care package - electricity allowances etc - or medical card, free travel and such. I think all should be means tested, regardless of age.

Tigerandahalf

tayto lover wrote: »

I wasn't a Civil / Public Servant.
I paid into my own pension.
I also paid all my taxes, levies etc.
I am not smug either just telling it as it is.

Fair play to you if you can retire at 54. But it begs the question of how someone can pay into a private pension and retire at that age living for possibly another 40 years. I can only see a bubble.