111k in my private pension, early 40s, is this a decent amount? I have no idea

tbaygirl2008

My employer puts in 8%. How does this fare in comparison to others out there? My friend said her employer has pension matching as a benefit, she puts in 15% and they match it! I thought this was very generous.

copacetic

this is better than average, but the average includes people without pensions. 8% is about average also, usually that increases per decade. All things being equal you should look to pay as much into tax free additional contributions as you can asap, if say you hope to retire early or even at 65 the earlier you have money in your pension the better as the compounding of growth is what it’s all about. You could be putting up to 25% of your salary in tax free. You should also look at the fund your pension is in and after advice consider putting some or all of it into higher growth more risky funds and ignore it and let it grow. Some years it will go down, some years up, but overall it will compound.

Depending on your salary If you do nothing but keep the 111k in a good fund, add the 8% per year and have it in say a 8% growth fund for 20 more years it could be a close to a million euro pension. If you match the 8% it would be closer to 1.5million, if you put in 16% if could be close to 2 million.

It can be very hard to find the AVCs at the most expensive time in most people’s lives but any amount compounds, so 5% is better than nothing.

bilbot79

My employer does 8% but no other matching. I started building up to 25% after getting the house. Mid'40s now with quarter million invested into high risk this and that. If the markets cheer and I get good pay rises. I hope to quit at 60 with 2m.

For anyone that is falling short on AVCs I think now is a good time as I saw a video today suggesting stocks tend to eventually rise to settle at higher prices following inflationary eras. Upping the ante now could mean you capture a bit of that.

tbaygirl2008

Thanks both, I am maxed out at 25% also but finding that hard to keep up as it leaves me with 3k net per month. Thinking of dropping down to 15%-20% for some breathing room, have moved to 100% equities also hoping that will pay off with time. We are so bad at discussing pensions in Ireland, I appreciate any advice. Also when I do the pension calculator online they always say I will be short even when my target income is fairly low, I am guessing this is just a sales tactic?

copacetic

depending on the calculator they tend to assume quite low growth. You have to live for now too and you don’t know what will happen with your health, job, life changing events etc. so put in as much as you can avc wise, you are in the right fund it sound like and it will be what it will be. Check it every year, do a full review every 5 years etc. You don’t have anything else you can do easily, except look for a better paid job with better pension.

bilbot79

Wild horses couldn't move me off the 25%.

Later when the interest far outweighs the contribution maybe but this is basically Ireland's big tax break. Can't waste it.