Paying a pension is like donating your money to a stranger

2008 ended up being a great boost for pensions in the long run as stocks were cheaper to accumulate in your pension fund, basically every crash in the stock market thus far has been an opportunity of a lifetime to accumulate wealth, this is a fact to this point in time.

Look, it's a way to go but why not hedge your bets or don't put all your eggs in the public pension other investments I can make basket (even though in theory that could be quite diversified etc)

I've often met older people that seemed to have rolled along and almost made a pension an aftetthought...not one of them ever whinged about having it

At the end of the day if you are on the high rate of tax your getting what 40% of your contributions back in that you would have contributed it to the govt for nothing? unless you can claim it back some other way...see it like a long term savings scheme with instant 40% interest, it may be locked up but unless you croak it before you get to it thats a decent savings account

Then you do have choice of companies/fees etc so you can tailor to a degree within the rules to suit your strategy

Just contribute what you can to get the tax relief would be my initial thought...obviously though maybe do that after you have raised the capital for the other investments ...

Investing in banks is stock picking, investment funds are diversified which protects them from the shocks like the banks had in 2008.

As I said previously, Pension funds start unwinding equity positions in pensions approximately 8 years before the pension falls due to protect the bulk of the investment, this is a default position and you have to request this unwinding not to happen to stay fully invested in equities/bonds for the remainer of the pension term.

OP, you are not investing in a pension in your 20's just for the benefit of your 70's. You are doing it for the benefit of your 30's and 40's. Because if you leave it to 40 to decide it's time to care about your pension, you will find it is too late to achieve a decent one. Every euro you put away in your 20's is worth many, many times that by the time you retire, even with inflation taken into account.

At the age of 25, if you put €1 into your pension fund, if matched by your employer, that euro becomes almost €4 straight away. By the time you are 35, it will likely be worth double that adjusted for inflation (€8). By the time you are 45, it will hopefully have doubled again (adjusted for inflation), giving you €16. Moving into lower risk funds after that, you might hope that it will double again over the next 20 years (adjusted for inflation), giving you €32 on your retirement.

For most people, it will simply be the best thing they ever did with money.

Yes, during your 20's and 30's you may have a lower wage (especially in your 20's), and lots of competing priorities for that money, so nobody expects you to be putting away huge sums, but you will be grateful for every euro you invested by the time you are in your 40's and realise you still have a long way to go before reaching your pension goals.

For example, if, at the age of 40 you decide you need €1 million in your fund by retirement to sustain the lifestyle you currently have, you may find that, if starting from scratch, that it is simply a mountain too big to climb. But even having €200K of that already in your fund will go a long, long way to helping you achieve that target (i.e. that €200K at 40 may result in €400K to €500K by retirement age simply through investment returns, meaning you only need to build up the remaining €500K to €600K from age 40), which would be a more realistic option for you.

I'm not sure what you mean by "wiped out", or "bailed out by the taxpayers".

Yes, when investing, there are good years and bad years, but the good years more than make up for the bad ones, leaving you with a good average over a long term. If we look at the S&P 500, a poplar index and measure of "wall street performance", since January 1993 (the last 30 years), it is currently up over 1,050% as of today. Yes, that means an investment 30 years ago is worth 10 times that today. Obviously, we need to adjust for inflation, which brings that down to 580%. Not bad, given we are currently in the middle of a huge bear market and suffering ridiculous inflation rates.

Crashes don't result in the entire fund being wiped out, simply that some of the gains from previous years are surrendered. This is not a problem in any way. And it is why one typically invests in high risk funds up to their 40's (so there is sufficient time to recover from the most recent crash) before de-risking to low yield funds, and then finally moving to very-low risk/yield funds in the years approaching retirement.

I was wondering why such a scheme was needed as people are surely smart enough to plan ahead but with the OP's approach to planning for retirement I understand why its needed.

Well, financial companies are looking for investors, state is looking at keeping the economy running.

My question is why does the state offers tax free AVC? If it's in good faith why they don't offer gouvernmental bonds or give you other ways of investing your money, such as buying a rental/business with your own tax free money?

I'm a bit skeptic of Uncle Sam, retirement age keeps increasing, thinking that it's just a plan for the state to stop the state pension and leave us on our own.

The state doesn't offer tax free AVC. The only "tax free" element to your pension is the lump sum. The rest is tax deferment. Instead of paying tax at the marginal rate now, you are putting the money aside before tax and investing it and then drawing down post retirement when you have no other taxable income.

The state does offer government bonds, and some of your pension fund may even end up investing in them, but they don't even match inflation, so why would you think that's a good idea?

You can be sceptical of Uncle Sam all you want, but this is Ireland, so I have no idea what you think the US Government have to do with your pension.

I really don't think you do!

And what do you intend to live on when you are too old to work? And how rich do you think you will be that you will be happy to forego such an amazing investment return?

If you start making €150K in your 40's, and haven't started a pension, then you are double-fcuked. You will need a significant pension fund to enable you to retire at the living standard you will have grown accustomed to, and thus need an even larger amount saved by the time you are 40. Basically, while all pension planning is based on assumptions etc, whatever amount you aim to retire on, you should aim to have approx 40% of it funded by your contributions/investment prior to 40.

I really have no idea what you are trying to say here.

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Yep, they’ll have to. Already trying to put the pension age to 67… “well people are living longer”… bullshit, there are more people to pay.

They already means test the disability allowance… they pretty know how many bank accounts everyone has although not what’s in them…so extending this to the pension… already floated… you’ll be marched into the SW office, asked to supply statements.

better off getting a safe in your residence. In years to come that will be happening.

Unfortunately lads like the OP will be bitching and moaning come retirement age about how little they have to live on, no doubt looking for a tax to be put on the pensions of the more prudent to bail them out. They'll probably have no shortage of political parties pandering to them too - you know, because of 'fairness' and all.

I have a retirement account in Canada and the US. I have some social insurance built up in both jurisdictions too. It will be a tricky situation to minimize witholding tax when the time comes to start paying out depending on which country I'm living in.

I'm glad I've consistently contributed though, even just to defer income tax and create a saving habit. What is the point of increasing my current spend? The marginal increase in quality of life is not really worth it for me, also by living a more lavish lifestyle it will just become my baseline expectation and increase the pressure to earn more money.

Once you earn a certain salary, the utility of more money falls exponentially. However by distributing the capital over your expected lifetime, you will maximize it's utility. For example I earn close to double that aspirational number you mentioned earlier but I started out on 22k and I contributed then, some small amount to establish the habit.

I agree in some respect though. I do not have a "pension fund". I don't trade or pick stocks either(this is really stupid considering that you are competing with investing professionals and the specific risk of betting on single stocks is very high). For me the most convenient way to build a diversified portfolio that should be able to ride out most shocks with some tweeks during big macro events, was to open a vanguard account, buy their cheap funds which mirror their exchange traded ETFs and have management fees of like .04%-.1%(for something a little exotic), you can also access fixed income there which lately has become an option after about 30 years. I think financial advisors, pension managers and other middle men offer very little value to me but charge expensive management fees.

Why bother with all of this? I don't just want to retire at 70, I want to retire at 50 and I will literally require millions. It's not that I want to do nothing(although that sounds nice right now), it's that I want the freedom to do nothing if that's what I desire. I wouldn't mind changing career or picking up a new hobby or whatever. Have no anxiety over money ever again even if we are struck by illness or a death. Financial freedom would be pretty sweet.

I believe it's also referred to as f*ck off money, just enough to tell people to f*ck off, if you don't want to do something