Pension value is currently 190k. No idea if this is good or not?

C

colin79ie

Registered User
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I'm 41 and my most recent statement tells me my fund value is just shy of 200k.

I have no idea about pensions , I just joined up to the company one when I was 24. I did increase my contributions as I am aware of the tax benefits. My limited knowledge of the statement always makes me think it's never enough.

So between me and the company, 13.5% is paid in. Salary is 85k. Think it's s defined contribution? It's with Aviva.

Without wrecking anyone's head, does this seem reasonable for my age, assuming I continue with it etc.

My plan at 24 was hoping to retire by 55 or 60. However, we are now thinking about buying a new home, probably 60-80k equity in our current one. Would that make retiring early a pipe dream ?
 
It is very rare for someone to be able to retire at age 55. It is usually for people who have sold a business, high paid PAYE workers or people who save a lot and have low outgoings.

If you continue to save 13.5% of salary into a pension and your salary increases by 2% per annum, you will have a fund of €634,548 at 55 and €898,747 at 60.

Of course, inflation will eat into the real value of that, so your €898,747 is worth €616,927 in today's money and €634,548 is worth €480,908. Based on your income, I wouldn't say that's enough.


Steven
www.bluewaterfp.ie
 
On what basis do you think you could retire early?
Do you have a clear understanding of your exact expenditure now and can you estimate for the future?

Without more info I will assume you pay half the 13.5%. It is completely unrealistic to think saving only 7% of salary for 30 years would enable enough to then live on that for 30+ years.

The general rule of thumb is work out your annual expenses then x25 - this is the pension you require at minimum.

50+o
 
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Hey 50andOut

Re that rule of thumb. Is that to work out your pension at age 60, 65, 66 or 70?

g
 
colin79ie said:
I'm 41 and my most recent statement tells me my fund value is just shy of 200k.
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Another (very) crude rule of thumb is that you should have a pot equal to around 3 times your salary at 40. So, by that metric, you're not doing too badly.

However, that assumes that you will retire at 67 (at which time you would aim to have a pot equal to around 10 times your final salary).

If you want to retire early, then I would suggest that you would need to materially increase your pension contributions. At your age, you can make tax-relieved contributions of up to 25% of your income (in addition to your employer contributions).
 
50andOut said:
On what basis do you think you could retire early?
Do you have a clear understanding of your exact expenditure now and can you estimate for the future?

Without more info I will assume you pay half the 13.5%. It is completely unrealistic to think saving only 7% of salary for 30 years would enable enough to then live on that for 30+ years.

The general rule of thumb is work out your annual expenses then x25 - this is the pension you require at minimum.

50+o
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I didn't 'think' anything on any basis so your post is not really of any benefit.
It would be nice to retire as early as possible. I don't envisage major expense. I would hope to have no mortgage to pay or children to pay for.

The assumption of saving 7% for 30 years was pulled from thin air . In my case I've never put less than 10% and currently put 13.5% into my pension .

As a matter of interest, or these 'thumbs', what's the average pension pot for retirees in Ireland if is it an industry secret?
 
colin79ie said:
I didn't 'think' anything on any basis so your post is not really of any benefit.
It would be nice to retire as early as possible. I don't envisage major expense. I would hope to have no mortgage to pay or children to pay for.

The assumption of saving 7% for 30 years was pulled from thin air . In my case I've never put less than 10% and currently put 13.5% into my pension .

As a matter of interest, or these 'thumbs', what's the average pension pot for retirees in Ireland if is it an industry secret?
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I remember reading something saying most people in Ireland who have a DC pension retire with a pot worth on average €80k.
That wouldn't go far!
 
colin79ie said:
The assumption of saving 7% for 30 years was pulled from thin air . In my case I've never put less than 10% and currently put 13.5% into my pension .
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colin79ie said:
So between me and the company, 13.5% is paid in
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So "BETWEEN me and the company 13.5% is paid in" - So your own statement advises the total as 13.5% including the companies - so a reasonable assumption based on the very limited info, that you pay half.

colin79ie said:
didn't 'think' anything on any basis so your post is not really of any benefit.
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Your plan at 24 and now at 41, (whilst also looking to buy a new home at god know what cost), asks if its a pipe dream to retire early - so yes you have thought about it but clearly not enough.

My post was clear in the suggestion that you need to have a grasp on your average annual costs - this is the KEY info before you can question whether your fund size is big enough.

Suggest you complete the money makeover template to provide a clearer picture in order to get any more meaningful advice
 
colin79ie said:
As a matter of interest, or these 'thumbs', what's the average pension pot for retirees in Ireland if is it an industry secret?
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The CSO finds that the median 55-65 year old has €63k in a voluntary pension pot..

But that hides a multitude. Lots of people have no pension fund at all, and lots of people of that age are in DB schemes too.
 
If you want to retire early and/or minimise your tax bill over time, you should be contributing close to the maximum revenue limits to your pension fund. For your age - that's 25% salary for your contribution, ignoring anything from your employer.

If you have access to the portal for your scheme, or the last statement, it will probably show projected incomes at different retirement ages. Have a look at the income for 50, 55, or 60 - do you think it will be enough to cover your living expenses and any lifestyle plans for the years before you qualify for any state pension?
 
They should be providing you with a Statement of Reasonable Projection each year. I looked at my income requirement now, excluding the biggest ticket items which should fall away in retirement (i.e. mortgage payments, retirement funding itself, etc). Then I adjusted the numbers for 2% inflation. Then I could approximate my income requirement in retirement. Then I assumed a 5% return from an all equity strategy and worked out what I need to have at retirement and what I need to be putting away now.
 
Maybe he meant retiring from existing job and getting part time employment which may be more feasible, l think the only way to access pension benefits at a reasonably young age (55-60) is to retire and then take up a part time job.
 
I will have my current mortgage paid off and kids through college before I'm 50.
I'm hoping that my expenses will reduce somewhat as a result. It will be mainly modest lifestyle and running a car, holidays etc.

I do plan on engaging a financial planner to help me map out this period of my life and consider all I've mentioned. I just used this forum to get some feeling as to whether my current pension fund, at my age, is good in general or poor in comparison to an average, if it exists. I have zero in-depth knowledge of this stuff.

All I want is to retire as early as I can so I can enjoy life, in a house that I own etc. I've worked every day since I was 18 in a highly stressful job so I would like to give some time back when I get older
 
What kind of work do you do? does it allow the option of reducing your hours as you get closer to retirement age? Might be a way to ease into retirement, giving you more free hours while still having an income.
I am not an expert on pensions, far from it, but even if you were not planning for early retirement, 13.5% (especially as it include the employer contribution) seems very low to be investing into your pension. Have you considered AVCs? I'd imagine they would be the first route any financial adviser would direct you towards. OF course, I'm assuming that you have the spare cash to invest in AVCs.
 
So I got online access finally and my limited knowledge shows the current value is 202k, with 161k paid in by me since I started at 24.

The fund says it's l&g multi index V Ser B.

My current annual payments are just over 11k.

Taking aside all the talk of early retirement, I think the general consensus here is to pay as much in as I can afford.

As a side note, I'm paye so will be entitled to the full state pension also, at 68.
 
Gordon Gekko said:
They should be providing you with a Statement of Reasonable Projection each year. I looked at my income requirement now, excluding the biggest ticket items which should fall away in retirement (i.e. mortgage payments, retirement funding itself, etc). Then I adjusted the numbers for 2% inflation. Then I could approximate my income requirement in retirement. Then I assumed a 5% return from an all equity strategy and worked out what I need to have at retirement and what I need to be putting away now.
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Did you add in the extra expenditure purely because you have more free time? Able to go away whenever you want? Spending more money purely because you aren't in work. Retirement isn't as cheap as people think it is.

colin79ie said:
I will have my current mortgage paid off and kids through college before I'm 50.
I'm hoping that my expenses will reduce somewhat as a result. It will be mainly modest lifestyle and running a car, holidays etc.

I do plan on engaging a financial planner to help me map out this period of my life and consider all I've mentioned. I just used this forum to get some feeling as to whether my current pension fund, at my age, is good in general or poor in comparison to an average, if it exists. I have zero in-depth knowledge of this stuff.

All I want is to retire as early as I can so I can enjoy life, in a house that I own etc. I've worked every day since I was 18 in a highly stressful job so I would like to give some time back when I get older
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Doesn't mean the kids won't be looking for financial help. "Help the kids out" is now a common expenditure for parents, especially with the way house prices are. I wouldn't presume that they will stop being an expense once they finish college.


Steven
www.bluewaterfp.ie
 
Steven Barrett said:
Did you add in the extra expenditure purely because you have more free time? Able to go away whenever you want? Spending more money purely because you aren't in work. Retirement isn't as cheap as people think it is.

Doesn't mean the kids won't be looking for financial help. "Help the kids out" is now a common expenditure for parents, especially with the way house prices are. I wouldn't presume that they will stop being an expense once they finish college.

Steven
www.bluewaterfp.ie
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Hi Steven,

I hope you’re well.

Yes, I think I’ve covered that off, but it’s a very good point. To be honest, we spend a hell of a lot on travel and experiences as things stand, so I genuinely can’t see that increasing from its current level.

You’re absolutely right in relation to the kids as well. We have a figure in mind for helping them with their first home purchase and thankfully we’re young enough that we should still be working when they’re at the finding their feet stage and might need additional support.

But very valid points.

Gordon
 
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