Retirement.

voldejoie

anewme wrote: »

They’d be mad to start a pension in those circumstances. No incentive. Better to spend it. 40 years working to end up equal or worse off than the social welfare.

The tax relief on pension contributions, especially if you're in the higher tax bracket, is a massive benefit, and even more so if your employer makes contributions too.

I'm 28 and currently pay 15% of my salary into a pension, with a 10% contribution by my employer. So every month 25% of my salary goes into the pot, and I get substantial tax relief on the 15% I pay so in absolute terms it's a very manageable figure out of my pay.

I appreciate not everyone is in position to make chunky AVCs and/or doesn't have generous employer contributions, but let's not pretend that there isn't an incentive to do so.

Squall Leonhart

voldejoie wrote: »

The tax relief on pension contributions, especially if you're in the higher tax bracket, is a massive benefit, and even more so if your employer makes contributions too.

I'm 28 and currently pay 15% of my salary into a pension, with a 10% contribution by my employer. So every month 25% of my salary goes into the pot, and I get substantial tax relief on the 15% I pay so in absolute terms it's a very manageable figure out of my pay.

I appreciate not everyone is in position to make chunky AVCs and/or doesn't have generous employer contributions, but let's not pretend that there isn't an incentive to do so.

Basically costs you 9% for 25% contribution, which is fantastic.

Just saying on another thread that I get a 4% contribution from employer, which isn't great. But even at that plus tax relief, it makes great financial sense.

voldejoie

Squall Leonhart wrote: »

Basically costs you 9% for 25% contribution, which is fantastic.

Just saying on another thread that I get a 4% contribution from employer, which isn't great. But even at that plus tax relief, it makes great financial sense.

It's a pretty sweet position to be in, but also the retirement age in my company is 60 (and most people go a few years earlier even), so apparently the high employer contribution is to facilitate that. I'm certainly not complaining and I'm very aware of how lucky I am with it!

I know it's impractical for many reasons but it would be great if there was some sort of minimum employer contribution in the private sector, it gives such a boost to the total amount going in. I hope the tax relief is making a decent difference for you!

anewme

T

voldejoie wrote: »

anewme wrote: »

They’d be mad to start a pension in those circumstances. No incentive. Better to spend it. 40 years working to end up equal or worse off than the social welfare.

The tax relief on pension contributions, especially if you're in the higher tax bracket, is a massive benefit, and even more so if your employer makes contributions too.

I'm 28 and currently pay 15% of my salary into a pension, with a 10% contribution by my employer. So every month 25% of my salary goes into the pot, and I get substantial tax relief on the 15% I pay so in absolute terms it's a very manageable figure out of my pay.

I appreciate not everyone is in position to make chunky AVCs and/or doesn't have generous employer contributions, but let's not pretend that there isn't an incentive to do so.

I am talking about the people of today who will not be able to buy a home and will be renting into old age.

There will be many situations where a person on a mediocre pension, say 12-15k year ends up paying that 12k in rent and only has the state pension to live on.

Same as if they were on social with hap payments. They really are no better off.

So really why would you bother? Irrespective of tax relief or not, you still have to pay it out now.

It does not impact me personally, but were I starting out today, I could be one of those people. Its not all low earners either. This will impact middle earners.

Spleerbun

Does anyone paying into a private pension now worry that, when someone eventually does attempt to address the "timebomb" and apparent unsustainability of the state pension going forward, that the proposed solution will be to punish those who tried to be sensible? In others words, excluding anyone with a private pension from receipt of the state pension, or implementing another form of levy on private pensions to provide for those who never bothered to start one?

anewme

They have been threatening for years to remove the tax free lump sum for example.

Squall Leonhart

Spleerbun wrote: »

Does anyone paying into a private pension now worry that, when someone eventually does attempt to address the "timebomb" and apparent unsustainability of the state pension going forward, that the proposed solution will be to punish those who tried to be sensible? In others words, excluding anyone with a private pension from receipt of the state pension, or implementing another form of levy on private pensions to provide for those who never bothered to start one?

Regularly crosses my mind... But have to believe I'm better off later for sacrifices now

The_Brood

Spleerbun wrote: »

Does anyone paying into a private pension now worry that, when someone eventually does attempt to address the "timebomb" and apparent unsustainability of the state pension going forward, that the proposed solution will be to punish those who tried to be sensible? In others words, excluding anyone with a private pension from receipt of the state pension, or implementing another form of levy on private pensions to provide for those who never bothered to start one?

I mean we take a lot of injustice but surely that would break the camel's back.

Spleerbun

Spleerbun wrote: »

Does anyone paying into a private pension now worry that, when someone eventually does attempt to address the "timebomb" and apparent unsustainability of the state pension going forward, that the proposed solution will be to punish those who tried to be sensible? In others words, excluding anyone with a private pension from receipt of the state pension, or implementing another form of levy on private pensions to provide for those who never bothered to start one?

They never fnck with pensioners....the more pensioners there are the less likely they are to do so.

As long as there's a non contributory pension therell be a contributory one.... Tax etc is largely fair & equitable.

.....you can check your current contribution level to your state pension..... Most of the electorate have a few quid..... Politics....democrasy etc etc.

Expecting to be housed at someone else's cost should be a bigger worry then fearing you won't get a contributory state pension after contributing.

Greentopia

There will be no retirement for me, just a slowing down probably as I age. By choice.

I'm a self employed craft worker and love what I do and don't see a time when I ever want to stop doing it as it's a passion.

"Retirement" age for me will be the same life I live now hopefully if I live that long, except I will have my partner with me to share my life in a few years time when he moves here.

Thelonious Monk

Retire in my 50s and move somewhere that doesnt have depressing rainy weather

CelticRambler

voldejoie wrote: »

I'm 28 and currently pay 15% of my salary into a pension, with a 10% contribution by my employer. So every month 25% of my salary goes into the pot, and I get substantial tax relief on the 15% I pay so in absolute terms it's a very manageable figure out of my pay.

Sounds very similar to my situation 25 years ago. I was in the UK at the time, put aside about the same percentage and "contracted out" of the state pension scheme so got a sizeable bonus each year.

But, as I remarked earlier, ten years later the promised growth of my final pension had been revised downwards again and again. Even now, the projected value of what remains is still based on an annual return of 5% but the fund this year is worth less than it was last year, due to the overall decline in stock market values, compounded by the drop in the value of sterling.

Assuming the UK government doesn't change the rules before I get to that point, and that GBPs still have some value in the world, I'm hoping I can cash out the whole lot when I get to 55 and invest it in something more productive.

Greentopia

Thelonious Monk wrote: »

Retire in my 50s and move somewhere that doesnt have depressing rainy weather

I like the rain. Better than sweltering in record breaking heat. And if the rain gets too much you can always take a cheap sun holiday.

andekwarhola

Work in a office job and intend to work until my mid 60s, health permitting. I try and balance my pension contributions with a nod to enjoying life now and looking after my family. I wouldn't really need my salary now in retirement. When I'm mortgage free and the kids are set up in life, I'd be happy enough just having an income that allows me a nice annual holiday, pay my bills, a social life of sorts and pay my health insurance really.

ytpe2r5bxkn0c1

CelticRambler wrote: »

Sounds very similar to my situation 25 years ago. I was in the UK at the time, put aside about the same percentage and "contracted out" of the state pension scheme so got a sizeable bonus each year.

But, as I remarked earlier, ten years later the promised growth of my final pension had been revised downwards again and again. Even now, the projected value of what remains is still based on an annual return of 5% but the fund this year is worth less than it was last year, due to the overall decline in stock market values, compounded by the drop in the value of sterling.

Assuming the UK government doesn't change the rules before I get to that point, and that GBPs still have some value in the world, I'm hoping I can cash out the whole lot when I get to 55 and invest it in something more productive.

You'd have to ask who was managing that fund and why there was so much reliance on stock/equities as to affect the overall fund in that way. Returns for the past number years have averaged 10.7% with, naturally, many doing much better.

CelticRambler

Dominik Important Busboy wrote: »

You'd have to ask who was managing that fund and why there was so much reliance on stock/equities as to affect the overall fund in that way. Returns for the past number years have averaged 10.7% with, naturally, many doing much better.

I do plan to ask during the week. I gave the annual statement a cursory glance when it arrived a couple of months ago, then got distracted with the "retired" part of my semi-retirement, but took advantage of this thread (and occasional showers today) to look at the detail.

But again, that's where the risk lies for so many ordinary folk: how many get out their calculator when they receive their annual statement and check to see whether they're getting the "right" rate of return? When you hear about the numbers of people who don't switch energy or phone or insurance providers, chances are it's more than just a few. These are the people who'll be phoning Joe to complain about the pittance they've received after 35 years' contributions.

Graces7

Greentopia wrote: »

There will be no retirement for me, just a slowing down probably as I age. By choice.

I'm a self employed craft worker and love what I do and don't see a time when I ever want to stop doing it as it's a passion.

"Retirement" age for me will be the same life I live now hopefully if I live that long, except I will have my partner with me to share my life in a few years time when he moves here.

Much the same here. except always worked craftwise for good for others. Never have retired even at nearly 80 now and intend to be buried with work in my hands. Much abed now and it is littered with yarns and knitting work.

Retirement is not an event but a state of mind and one I never managed to reach

coleen

My plan :I am now 56 and intend to work until 60 and I won’t receive the state pension until 68 . My husband is 63 and has reduced his hours to 19.5 hours a week so two days one week and 3 days the next week. He will get the state pension at 67 and may continue to work until that. I do not have a pension but at 48 I started to save seriously and when I come to 60 I will have a 100k so that will give me 12k a year up to my state pension. My husband has a private pension also small and we have a small rental income. So in total we hope to have 35k annual income. I am glad to hear that some people say you don’t need as much as you would think. That is what I am hoping for.
I don’t think we will be bored as we play golf hill walk and cycle.
I also intend to volunteer and have a few courses that I am interested in doing.
We are also going to explore house sitting and dog sitting etc. we like to travel and would hope to be able to spend the winter in a warmer location.
I am looking forward to it being a positive experience

sbsquarepants

I'd like to retire today if i could! I've only really given it a bit of thought in the past year or two though.

I'm 46, have paid into a pension for maybe the past 15 years or so but it's not great, should have started 10 years earlier. I've recently doubled my payments in attempt to stave off the need to shoplift in my old age! I've recently taken out a new mortgage which i'm due to pay untill i'm 70:eek: My plan is to knock as much time off that as possible, i want to finish paying at least a decade earlier if not before. Once that's done, i'll save every red cent possible for a couple of years and then call it a day.

When you're in your 20's and only really concerned about chasing women and partying you tend not to listen to financial advice - but given the chance to do it again, i'd take all that money i spent on alcohol and cocaine and pile it into a decent pension. That way i could buy loads of alcohol and cocaine when i retire.:D

Hector Savage

Who is entitled to the state pension ?
any Irish citizen living in Ireland ?

tjhook

I find it hard to criticise those who aren't putting funds aside for retirement. I'm paying into a pension, but I wonder if I'm a patsy for doing so.

A pension is a fund that you can't access until you retire, but the state can dip into when it wants to. As we've seen.

I have a nagging feeling that when the time comes, those who have made provision for themselves will find it "redistributed" to those who have not. Either directly, or indirectly (e.g. through taking the state contributory pension from them, or means testing it).

sbsquarepants

This is exactly the same niggling doubt i have. My pension has already been robbed, there is precisely nothing stopping it from happening again, but the real risk is that after 30 odd years of paying into it the government of the day will say, well you have a private pension so you don't get the state one, or get a reduced version of it.
Despite doubling my payments i still have little faith that i'm doing the smart thing, i'm just hoping that given the tax break and the amount the job top it up by, i'll still finish up overall even if it's fleeced again. (job top up was 100% for the first 10 years or so, only 10% now, another reason i wish i'd started sooner / paid more in in the early years:mad:)

tayto lover

I think the best form of pension these days is to buy a second house and let it out. Hopefully the rent pays the mortgage and when you retire you can sell or live off the rental income.

Your private pension is losing value all the time now, so it's not as worthwhile.

By that I mean because the State Pension age is increasing.


Before you expected State + Private from 66 onwards. Now it is State + Private from 68 onwards, and probably from 70 onwards. So the value of your private pension is diminishing as well. Unless your private pension is very good and you can do without the State income, you'll be working till 70 anyway .. private pension or not.

anewme

Bang on and why I also am not sure about pumping more into it.

cefh17

salonfire wrote: »

Your private pension is losing value all the time now

I'm sorry... What? Where did you get this from?

cefh17

cefh17 wrote: »

I'm sorry... What? Where did you get this from?

Previously, people could have lived on State + Private from aged 66 onwards.

It will likely be from 70 onwards in years to come.

So having a private pension for the 66 - 70 duration now is no use to you ... or you will be drawing on it a lot more heavily than you would have today, to make up for the shortfall in State pension.

cefh17

It's better than having no pension from 66-70. I'll stick to my next 35+ years of compounding interest thanks

Squall Leonhart

cefh17 wrote: »

I'm sorry... What? Where did you get this from?

If anything else, surely retirement age pushing out a year or two gives further time for compound interest, though probably moved to very low risk accounts by then.

cefh17

cefh17 wrote: »

It's better than having no pension from 66-70. I'll stick to my next 35+ years of compounding interest thanks

Not quite.

Today, I could have private €8000 + State €12000 giving €20000 p/a while is perfectly adequate to retire from 66

In future, I will have private €8000 p/a from 66-70, which is not possible to retire. Therefore I'll have to keep working.

ytpe2r5bxkn0c1

cefh17 wrote: »

It's better than having no pension from 66-70. I'll stick to my next 35+ years of compounding interest thanks

Correct. The premise in the post above makes no sense and is no reason to opt out of a private pension. There are large numbers of people retiring early precisely because they have private pension funds and are no longer reliant on the state pension.

ytpe2r5bxkn0c1

salonfire wrote: »

Not quite.

Today, I could have private €8000 + State €12000 giving €20000 p/a while is perfectly adequate to retire from 66

In future, I will have private €8000 p/a from 66-70, which is not possible to retire. Therefore I'll have to keep working.

That's one very poor private pension at €8000 per annum. And no lump sum either?

Dominik Important Busboy

Dominik Important Busboy wrote: »

Correct. The premise in the post above makes no sense and is no reason to opt out of a private pension. There are large numbers of people retiring early precisely because they have private pension funds and are no longer reliant on the state pension.

Yes, a few are not reliant on the state pension.

But the vast majority are reliant on it .. or can struggle a year or two without it till 66.

But now that struggle is going to be extended from 66 to 70, maybe 72. So the usefulness of a private pension to you is less - or you will need to endure more hardship. waiting for the State pension.

Dominik Important Busboy

Dominik Important Busboy wrote: »

That's one very poor private pension at €8000 per annum. And no lump sum either?

It's just for illustrative purposes to show how waiting longer on the State pension reduces the worthlessness of your private pension .. especially if your pension is on the low side. Because you'll be working extra years anyway.

so either you're working a few years, in which case your private pension stretches out less because you're not drawing down, and is more useful

or you're not working a few years, in which case you have greater than 0 because you have a private pension

either way you're not making massive sense imo

bluewolf

bluewolf wrote: »

so either you're working a few years, in which case your private pension stretches out less because you're not drawing down, and is more useful

or you're not working a few years, in which case you have greater than 0 because you have a private pension

either way you're not making massive sense imo

Person A pays €100 a month for 30 years and is able to retire at 66 today (with State pension)

Person B pays €100 a month for 30 years and has to wait until 70 to retire in future(with State pension).



Or alternatively if person A (with State) and person B (Private only) retire at 66, person A has a superior lifestyle than person B


Who's contributions were better value ?

ytpe2r5bxkn0c1

salonfire wrote: »

It's just for illustrative purposes to show how waiting longer on the State pension reduces the worthlessness of your private pension .. especially if your pension is on the low side. Because you'll be working extra years anyway.

Sorry, that makes no sense. Believe me, I know having retired at 54 thanks to a private pension well managed.

How does your illustration work with a pension of 2/3 salary plus a year and a half's salary tax free lump sum?

cefh17

salonfire wrote: »

Person A pays €100 a month for 30 years and is able to retire at 66 today (with State pension)

Person B pays €100 a month for 30 years and has to wait until 70 to retire (with State pension).



Or alternatively if person A (with State) and person B (Private only) retire at 66, person A has a superior lifestyle than person B


Who's contributions were better value ?

B, they've had 4 years of compounding interest (albeit minimal as pointed out above, should have gone mostly/all bonds by then) and have the option of retiring early before getting the state pension because they can afford to. A and B will be waiting the same time to get the state pension if they're the same age now

Dominik Important Busboy

Dominik Important Busboy wrote: »

Sorry, that makes no sense. Believe me, I know having retired at 54 thanks to a private pension well managed.

How does your illustration work with a pension of 2/3 salary plus a year and a half's salary tax free lump sum?

Doesn't matter what the amounts are .. the point I was making is that an increasing State Pension age reduces the value of the contributions you made to your pension while working.

This loss in value will mean you work extra years or your income from 66 - 70 is less than someone retiring with the exact same pension pot today.

salonfire

salonfire wrote: »

Doesn't matter what the amounts are .. the point I was making is that an increasing State Pension age reduces the value of the contributions you made to your pension while working.
.

it still doesn't make any sense

cefh17

Salonfire, you take the high road, and I'll take the low road, and I'll be retired before ye

bluewolf

bluewolf wrote: »

it still doesn't make any sense

Especially if you expect a low pension, it makes a lot of sense. You'll be working extra whether you like it or not. Is having a private pension from 66 to 70, maybe longer, any use to you if you are continuing to work anyway?

salonfire

salonfire wrote: »

Is having a private pension from 66 to 70, maybe longer, any use to you if you are continuing to work anyway?

you don't have to draw it down at 66? just save it longer and let it build up more?
if you have built up a pot of 500k and decide to buy an annuity at age 66, you might get 10k per annum with it (totally making up annuity rates here & you are not obliged to buy an annuity)
if you have built up a pot of 500k at age 66 and leave it in til 70, you might have 600k. then the annuity is going to be expected to cover fewer years. so maybe you get 15k or 20k per annum.
this is all on top of the state pension

i mean if scheme rules allow you to retire late which they usually do

cefh17

cefh17 wrote: »

Salonfire, you take the high road, and I'll take the low road, and I'll be retired before ye

I do contribute to a private pension with employer contribution as well.

But I do it knowing it won't be as valuable when I retire compared to if I was retiring today all things being equal.

jmreire

KeithM89 wrote: »

I expect to be dead long before then.

By the way they are pushing back the retirement age, you could live to a ripe old age, and still be dead before your retirement age.....:D:D:D

rockbeast

rockbeast wrote: »

Retirement is wasted on the old.

Life is a one-way dirt-trip so make your retirement plans then start them next week.

Tell my parents that.

“Well, your fathers for his operation at the end of the month, so we’ve gone to Majorca to take his mind off it”

“I thought you were going after his op?”

“Errr, we are. Just to help him recover so he is well enough to go to St Kitts in December”.

The J Stands for Jay

salonfire wrote: »

Yes, a few are not reliant on the state pension.

But the vast majority are reliant on it .. or can struggle a year or two without it till 66.

But now that struggle is going to be extended from 66 to 70, maybe 72. So the usefulness of a private pension to you is less - or you will need to endure more hardship. waiting for the State pension.

Surely you mean the state pension is the one which is having its usefulness reduced

The J Stands for Jay

salonfire wrote: »

Person A pays €100 a month for 30 years and is able to retire at 66 today (with State pension)

Person B pays €100 a month for 30 years and has to wait until 70 to retire in future(with State pension).



Or alternatively if person A (with State) and person B (Private only) retire at 66, person A has a superior lifestyle than person B


Who's contributions were better value ?

In the first scenario, the value of Bs contributions is greater. On the second, the value of the contributions is equal.

Stop moaning ffs

Just recently realised I’ll never be able to afford my own home, despite a decent education qualifications and wage. I’m permanently stuck on the rental market and my landlord could decide to sell at any time and I’m screwed.

There’s another thread somewhere about how many homeless pensioners were going to have in a few years. Scared but have to admit I’ll be among them.

McGaggs

McGaggs wrote: »

In the first scenario, the value of Bs contributions is greater.

Yes, if you don't mind working an extra 4 years.