Hi all,
I started a pension later in life.
I started it 2 years ago, and currently has a value as of Feb 24 of e18,500.
Between my contributions (I put in AVCs also) and my employers, I put in 1000 a month (I upped avcs around August 2023).
I know it's better than nothing, but I am 45 years old in May and wonder if it's worth continuing 20 years of 1k in a pot?
I only have a small mortgage (about 115k) on a new house worth about 325k in the current market (built it a couple years ago on my own).
If you've a private pension, are you also eligible to a state pension?
Sorry for maybe obvious questions-am a good saver. Just no clue what am doing finance-wise.
Absolutely continue with your pension arrangements. Think of it as a savings account with a range of income options for you when you retire. Until then just remember that the bigger your balance the better off you will be.
If the projection above is reasonably accurate it will be a substantial portion of your retirement income and is likely to be the difference between just existing on the state pension and having a reasonably comfortable lifestyle when retired. And yes having a private pension does not stop you from having a state pension.
Now that you have taken this important first step along with realising that AVCs are very worthwhile, don’t sit back. Instead actively manage your financial retirement plan. Some ways of doing this follow…..
As your income rises consider raising future AVCs accordingly. If you get a work bonus, same thing. Forty % tax relief on salary or bonus invested in your pension is a massive incentive. Who knows how long that might continue. If your income and expenditure situation permit it, try to squeeze as much out of this tax break as possible.
Consider how the pension is invested. Growth is tax free. Low risk funds may be safer but offer less potential for growth. Medium or higher risk funds mean the opposite. Perhaps get some advice on this and review periodically. As you are already a good saver you may find seeing your pension balance growing exponentially over the next 21 years exciting, motivating and reassuring.
I suggest you get your PRSI statement to check that you are on track to maximise your state pension. You will need 2080 contributions to get the maximum payment at age 66. Any less by then will mean a pro-rata payment.
If the reason why you began your pension late in life is because you spent some working life abroad, investigate whether you have accrued partial state (or employer) pension entitlements in that country.
Perhaps some old employer pensions in this country exist of which you have no knowledge. Check this out too.
Finally, having your home paid for by the time you retire (and therefore not renting) is a fundamental pillar of having a relatively secure and independent existence when finally enjoying the fruits of your working life. Best of luck.