Pension on Salary of ***

kodirl

Hi all,

I'm looking for some advice regarding setting up a private pension. I'm a 31 yr old and I'm looking to set up a private pension for my retirement. I'm a private sector employee and my employer will not be matching any contributions that I will be making.

Ideally I'd like to have a pension of 30k per year (after all tax deductions) when I retire at 68. Can anyone advise on how much I need to contribute monthly now to attain this and advise of any good pension advisors I can contact to get this set up and in place.

All comments welcome :-)

ANXIOUS

Have a look for a pension calculator there are lots of them around. You would be looking at a high 3 or 4 figure contribution amount monthly to get that annuity in retirement.

troyzer

I just had a look at the pension calculator on the pensions authority website and there has to be something wrong with it. It was telling me (at 25) that I'd have to save 13% of my salary (around €30k at the moment) in order to have two thirds of my current salary when I retire? That makes no sense because with the state pension it means I'd only need to top it up by €7k. I find it hard to believe that the Pensions authority is telling me I need to save just shy of €4k a year for the next 45 years in order to have €7k for probably 20 years. Does it not factor in growth?

Atlantic Dawn

Aviva have a calculator, would be a decent guide...
www.mindthepensiongap.ie/

anewme

Atlantic Dawn wrote: »

Aviva have a calculator, would be a decent guide...
www.mindthepensiongap.ie/

Page not found

anewme

troyzer wrote: »

I just had a look at the pension calculator on the pensions authority website and there has to be something wrong with it. It was telling me (at 25) that I'd have to save 13% of my salary (around €30k at the moment) in order to have two thirds of my current salary when I retire? That makes no sense because with the state pension it means I'd only need to top it up by €7k. I find it hard to believe that the Pensions authority is telling me I need to save just shy of €4k a year for the next 45 years in order to have €7k for probably 20 years. Does it not factor in growth?

Not sure ever you are getting 7k from. Is the state pension not around 12,650 which would mean you would need a much bigger top up than 7k

Nermal

troyzer wrote: »

I just had a look at the pension calculator on the pensions authority website and there has to be something wrong with it. It was telling me (at 25) that I'd have to save 13% of my salary (around €30k at the moment) in order to have two thirds of my current salary when I retire? That makes no sense because with the state pension it means I'd only need to top it up by €7k. I find it hard to believe that the Pensions authority is telling me I need to save just shy of €4k a year for the next 45 years in order to have €7k for probably 20 years. Does it not factor in growth?

26.4 years (I'm assuming you're a man), with a minimum of 5 years, increasing by 1.5% PA every year that you're retired, with 50% payable to your spouse on death.

It's also assuming contribution charges of 5% and an AMC of 1% which is utter robbery. Shop around.

Squall Leonhart

The pension gap calculator tells you that to get 30,000 per annum pension, retiring aged 65, starting paying into a fund at age 31, with no existing fund, you'll need to pay in a staggering 2287 a month (which in all probability vastly exceeds the % you'll get tax relief on)

That's how impossible it is!!

I assume that's all kinds of wrong, or assuming very very low growth or high fees.

But it is a snapshot into how wide the gulf between public and private pensions can be.

troyzer

Nermal wrote: »

26.4 years (I'm assuming you're a man), with a minimum of 5 years, increasing by 1.5% PA every year that you're retired, with 50% payable to your spouse on death.

It's also assuming contribution charges of 5% and an AMC of 1% which is utter robbery. Shop around.

I am a man yeah. Is that 1.5% to account for inflation? And why would I care if there's anything left over for my spouse? So it's the fees then.

What a load of ****e. And this is with tax incentives. I have a huge issue where my work makes me quite globally mobile and it's been very difficult to date to set up a single pension fund which is tax advantaged wherever I go.

Henry Ford III

Whats' the cash fund required to purchase that annuity?

p.s. Annuity rates are very low due to historically low interest rates. There are ARF options too don't forget.

Bubbaclaus

troyzer wrote: »

And why would I care if there's anything left over for my spouse?

Ouch.

troyzer

Bubbaclaus wrote: »

troyzer wrote: »

And why would I care if there's anything left over for my spouse?

Ouch.

#sorrynotsorry

In all seriousness though, why would that be the default option? My partner makes more money than me and she works in a sector which means she's likely to always have stronger earning power. Why would I want to reduce my income now to make sure she has more money when I'm dead? She'll be fine.

Henry Ford III

troyzer wrote: »

#sorrynotsorry

In all seriousness though, why would that be the default option? My partner makes more money than me and she works in a sector which means she's likely to always have stronger earning power. Why would I want to reduce my income now to make sure she has more money when I'm dead? She'll be fine.

How would you feel if she took the same view and died prematurely?

troyzer

Henry Ford III wrote: »

troyzer wrote: »

#sorrynotsorry

In all seriousness though, why would that be the default option? My partner makes more money than me and she works in a sector which means she's likely to always have stronger earning power. Why would I want to reduce my income now to make sure she has more money when I'm dead? She'll be fine.

How would you feel if she took the same view and died prematurely?

Fair enough? It's her money.

catrionanic

troyzer wrote: »

Henry Ford III wrote: »

troyzer wrote: »

#sorrynotsorry

In all seriousness though, why would that be the default option? My partner makes more money than me and she works in a sector which means she's likely to always have stronger earning power. Why would I want to reduce my income now to make sure she has more money when I'm dead? She'll be fine.

How would you feel if she took the same view and died prematurely?

Fair enough? It's her money.

I am assuming you don't have children and an expensive mortgage to pay!

troyzer

catrionanic wrote: »

troyzer wrote: »

Henry Ford III wrote: »

troyzer wrote: »

#sorrynotsorry

In all seriousness though, why would that be the default option? My partner makes more money than me and she works in a sector which means she's likely to always have stronger earning power. Why would I want to reduce my income now to make sure she has more money when I'm dead? She'll be fine.

How would you feel if she took the same view and died prematurely?

Fair enough? It's her money.

I am assuming you don't have children and an expensive mortgage to pay!

Nope, by choice.

Jim2007

troyzer wrote: »

I just had a look at the pension calculator on the pensions authority website and there has to be something wrong with it. It was telling me (at 25) that I'd have to save 13% of my salary (around €30k at the moment) in order to have two thirds of my current salary when I retire? That makes no sense because with the state pension it means I'd only need to top it up by €7k. I find it hard to believe that the Pensions authority is telling me I need to save just shy of €4k a year for the next 45 years in order to have €7k for probably 20 years. Does it not factor in growth?

It is about right. To generate a 30k pension you need to have accumulated assets in excess of about 800k on retirement. Most European second tier pensions, which is what you are talking about start with contributions of 12% - 13% pa at aged 25, with a 50/50 split with the employer.

troyzer

Jim2007 wrote: »

It is about right. To generate a 30k pension you need to have accumulated assets in excess of about 800k on retirement. Most European second tier pensions, which is what you are talking about start with contributions of 12% - 13% pa at aged 25, with a 50/50 split with the employer.

I didn't say €30k pension. I said two thirds of my current €30k salary minus the state pension which comes to €7k I'd need every year.

As I said already, I'm coming to the realisation that in order to start a pension I'm probably going to have to resign myself to the fact that I probably won't have employer contributions or tax incentives because of the international nature of my work.

anewme

I think people are gettting a bit confused because the original question is about generating a pension of 30k and people thought you were OP.

troyzer

anewme wrote: »

I think people are gettting a bit confused because the original question is about generating a pension of 30k and people thought you were OP.

Fair point. I do seem to have hijacked this a bit.

Henry Ford III

Do you pay tax Troyser?

troyzer

Henry Ford III wrote: »

Do you pay tax Troyser?

In Ireland? At the moment I do. But in my previous job I paid tax in the UK, before that Australia. That's all in the last 18 months.

I'll probably be working in west Africa in the next year or two.

893bet

Best to assume there will be no state pension in the future or that it will be capped if you have a private one as well.

There will be changes due to the aging population.

troyzer

893bet wrote: »

Best to assume there will be no state pension in the future or that it will be capped if you have a private one as well.

There will be changes due to the aging population.

You're probably right, I'm assuming best case scenario. In reality I probably won't have enough credits in any one jurisdiction to claim a state pension whilst also having to splti my pension pots into each jurisdiction I've ever worked in if I want to claim tax incentives. Which would be pointless because the added cost of paying fees and having less capital in each pot would mean I'd end up with less money overall at the end.

There doesn't seem to be a way for me to set up my own pension that will suit me for my entire career regardless of where I live and it's incredibly frustrating. I don't know what to do.

368100

Henry Ford III wrote: »

Whats' the cash fund required to purchase that annuity?

p.s. Annuity rates are very low due to historically low interest rates. There are ARF options too don't forget.

Im leaning towards the ARF option myself....while off yet and things could change but id rather have more control over things and annuity rates are crap

Henry Ford III

368100 wrote:

Im leaning towards the ARF option myself....while off yet and things could change but id rather have more control over things and annuity rates are crap

It's not without risk but on balance it works for me

Carawaystick

troyzer wrote: »

I didn't say €30k pension. I said two thirds of my current €30k salary minus the state pension which comes to €7k I'd need every year.

As I said already, I'm coming to the realisation that in order to start a pension I'm probably going to have to resign myself to the fact that I probably won't have employer contributions or tax incentives because of the international nature of my work.

With 35 years of inflation, your final salary should be higher so you'ld need to aim for more than a 7k pension.

Heres Johnny

Go talk to an advisor of your choosing, get a recommendation from someone that knows and trusts one. Maybe an RPA. What you want is a picture of what retirement will look like for you and then plan on how to achieve it. Don't go into a bank for this, the staff there haven't the time or interest to give you the help the fees deserve. Use a broker or a fee based advisor. Someone you know knows someone in this industry. Talk to more than one if you need to.

The figures being bandied about here are wrong don't use an online pensions calculator. They use annuity rates to calculate.
I work in actuarial for an insurance company, I see these numbers and quote on them everyday. It's very possible to achieve what you want to achieve when working with someone that will advise and plan with you.

troyzer

Carawaystick wrote: »

With 35 years of inflation, your final salary should be higher so you'ld need to aim for more than a 7k pension.

True but then my salary is also likely to increase several times over by the time I retire. But you can't realistically make pension decisions now based on that, the same goes for inflation.

Heres Johnny wrote: »

Go talk to an advisor of your choosing, get a recommendation from someone that knows and trusts one. Maybe an RPA. What you want is a picture of what retirement will look like for you and then plan on how to achieve it. Don't go into a bank for this, the staff there haven't the time or interest to give you the help the fees deserve. Use a broker or a fee based advisor. Someone you know knows someone in this industry. Talk to more than one if you need to.

The figures being bandied about here are wrong don't use an online pensions calculator. They use annuity rates to calculate.
I work in actuarial for an insurance company, I see these numbers and quote on them everyday. It's very possible to achieve what you want to achieve when working with someone that will advise and plan with you.

What's the going rate for sound professional advice? I know the golden rule is to always make sure you're paying somebody for their help, otherwise they're making money off you in less transparent ways. I wouldn't even know where to start.

from the PB calculator

Regular monthly contributions are assumed to continue to your retirement age and are assumed to increase by 2.5% per annum over the term to your retirement date.
Investment return is assumed to be 4% per annum after expenses until 10 years before your retirement date. The investment return is then assumed to reduce annually to the post-retirement interest rate over the 10 year period prior to retirement. This is intended to reflect a common investment strategy of defined contribution pension scheme members and allows for a reduction in risk during the 10 year period leading up to retirement. The investment return earned on your fund is estimated to be 3.7% per annum after expenses from now until your retirement date.
The annuity rate used to calculate your pension at retirement uses a post-retirement interest rate of 2% per annum after expenses. Your pension is assumed to increase at 1.5% per annum in retirement and is assumed to be guaranteed to be paid for a minimum of 5 years.

so it is allowing for growth as well as increase in contributions pa

That annuity escalation would probably cost a bit as well

Heres Johnny

troyzer wrote: »

Carawaystick wrote: »

With 35 years of inflation, your final salary should be higher so you'ld need to aim for more than a 7k pension.

True but then my salary is also likely to increase several times over by the time I retire. But you can't realistically make pension decisions now based on that, the same goes for inflation.

Heres Johnny wrote: »

Go talk to an advisor of your choosing, get a recommendation from someone that knows and trusts one. Maybe an RPA. What you want is a picture of what retirement will look like for you and then plan on how to achieve it. Don't go into a bank for this, the staff there haven't the time or interest to give you the help the fees deserve. Use a broker or a fee based advisor. Someone you know knows someone in this industry. Talk to more than one if you need to.

The figures being bandied about here are wrong don't use an online pensions calculator. They use annuity rates to calculate.
I work in actuarial for an insurance company, I see these numbers and quote on them everyday. It's very possible to achieve what you want to achieve when working with someone that will advise and plan with you.

What's the going rate for sound professional advice? I know the golden rule is to always make sure you're paying somebody for their help, otherwise they're making money off you in less transparent ways. I wouldn't even know where to start.

I've worked alongside fee based and commission based advisors and it's more down to the person than their method of getting paid that's important. That's why I'm saying get a recommendation from someone you know and trust. Somebody knows somebody.
When I was an advisor (commission based) most of my business came in as referrals which was extremely gratifying.
Fees are pretty transparent these days, both to the advisor and to the financial institution. Don't be afraid to talk to a few, don't rush anything and don't make a decision until you're happy you understand everything