Starting a Pension Later in Life

Turquoise_Spots

Hi all,

Am single 43 year old. Mortgage of e122,000.

I suppose, I just never understood pensions and had no interest in them, until I had a mortgage (4.5 years into the mortgage) and felt more serious about money now am getting older.

So, I started a pension in Dec 2021 through my company. Between employer contribution (8%) and my contribution (AVCs of 8%), I put in about e700 per month (16%).

I feel so silly for not having started years ago (am in company 10 years) and I know its better late then never, but am wondering what is the point/should I continue at this age, or should I add in more AVC (I could possibly do another 4% with the new tax credit from the budget).

I suppose as a young one gallivanting around, I never though about retirement.

- I plan to have mortgage paid off by 65.

- The year I retire, I would like to buy a new car.

- I am quite able to live on e20/week food if I need to (I have done when building a house). Utility bills might be an issue-who knows. But believe I'd be able to live on the state pension.

I'll never be able to catch up those 10 years lost. Is ther anyway to project what a pension could be? Surely e700x12 X 22 years isn't as black and white as it seems?

retalivity

Whose it with? Usually pension providers have a portfolio projection service, to give some kind of idea on future value. Although always remember 'past performance is not indicative of future earnings...', so many companies may not wish to speculate on what you could have...

Even if the pension had 0% growth over the time, you are getting at least 20% more for it as a tax-free benefit than taking it as cash. Also as you get older, the thresholds increase allowing you to contribute a lot more, up to 40% if you are over 60.

Henry Ford III

Get proper independent advice. It won't be free.

Calculator123

Firstly, this is not professional advice but my own opinion.

Congratulations on starting a pension. So many do not have any pension plans and only realise the pitfalls when it's too late. You're at a distinct advantage in owning your own home. It gives you security in retirement irrespective of your pension situation - you won't have to pay rent, which for others is a looming disaster.

But you need to ensure you can cover your other costs once you retire. This might be running that nice car you want to buy as well as food, bills and anything unexpected. You may even want the occasional holiday. I think another significant bill that some forget, is health insurance. Costs for everything are only going up, so it's always better to have your own pension in addition to the state pension regardless of size, and remember that the age of retirement is also creeping up. It's no longer 65.

You're saving a lot of your income. Should you save more? Maybe but it depends on whether you want to prioritize enjoying life now or squirrel away for the future. You need to find the right balance for you.

Google some pension calculators from Irish pension funds. Your employer pension fund website should have a portal you can access for more personalized estimates and you can usually play around with the variables.

For example if I take the Zurich pension projector here https://www.zurich.ie/pensions-retirement/calculators/pension-calculator/

And plugging in the basics you mentioned, suggests you'll have 1600 euro per month (in today's terms). Does that sound enough for you to live on?

Good luck with it.

Alkers

Is your mortgage fixed? Can you ship around there or overpay?

Without knowing your salary etc it's hard to advise in terms of percentages but if you can afford your current contributions and the additional 4%, go for it.

You can always reduce monthly contributions again if you need more cash each month

Jim2007

OP, you can't do anything about the past, so beyond learning that you need to take charge of your finances there is little to be gained by rehashing the past. Is is what you do from here on out that counts.

You should put aside the idea that you can scrap by in retirement, you can do that kind of thing when you are young and you have an objective such as building your house. But when the objective is death, it's not much fun.

I am retired and I can tell you being retired is an expensive business unless all you want to do is sit around and watch the grass grow - your week is made up of six Saturdays and a Sunday... I'd say you should expect to spend about sixty or seventy percent of what you spend now.

I don't believe all is lost for you, a back of an envelope calculation would suggest you should have a fund of about €250k - €260k but that is before inflation and baring any major financial crisis. So it will be tight and you do need to manage it carefully and try to add as much more as you can to it.

So next step for you should be to find a financial planner, sit down with them and make a financial plan and then concentrate on following and revising that plan over time.