I really don't see why you think we are "regurgitating the conventional wisdom of the pension industry".
Did anybody say anything that banal? I know I certainly didn't.The conventional wisdom which is really conventional stupidity is that you can't be too young too start a pension.
Well, in my view it's a question of striking a reasonable balance between pursuing medium and long-term financial objectives.He should save his money outside a pension scheme until he is ready to buy in Ireland.
Talking moneyJust a pension health check please. I'm aged 27 and have been part of this pension scheme for the past three years. I'm currently paying into a 50:50 risk sharing scheme, DB Section & DC section. Just to note the Salary Cap is €48,000 - I expect to exceed that salary by 2021 - 2023.
Currently these are the figures:
Basic Salary: €36,000
Overtime: €4,000 - 6,000 (not pensionable I understand)
Total: €42,000
Pension: Enrolled since 24
Employer: Contributes 8%
Myself: Contributes 5%
AVC: Paid 2% AVC for two years, raised it to 6% in January.
Total: 19% combined total.
As I'm earning good money for my age, am I doing the right thing by having an AVC? I understand and accept that I won't see this until retirement.
Also my salary will rise to 40K by December of this year. Instead of increasing my AVC this December I was thinking of increasing my debt pay down by the surplus and building a solid emergency fund.
What would you advise?
If I may bring this thread back into line - I don't think everyone will agree with Brendan and I don't think Brendan will agree with the other view.
My opinion, taken as a pinch of salt from a young lad is that the approach of Brendan and many others, "that you must buy a house at all costs", got this country into the housing mess during the Celtic Tiger. These sentiments of owning your own home introduced many great people into negative equity, financial insecurity, broken relationships and worse over the past decade. As I mentioned before renting suits our situation best for the next 2-3 years. I do of course understand the pro's and con's of owning your home, but it's not a case that I'm 50 paying into a pension and no home.
I may be wrong, but I thought the figures of a pension pot started in your twenties vs thirties is massive.
@jjm2016 I have a sick pay scheme/salary protection which gives me full pay for 6 months and a lower amount for another year. I also pay into a life insurance policy for death in service ect.
I also have a rainy day fund of €1,000. I'm planning to build up 3 months expenses over the next few months. Although I do have assets of 25K that I could liquidate if I became ill.
Currently save around €200 - €350 per month depending on overtime, could save more but clearing a small loan in the Credit Union to become debt free by 2018.
I may be wrong, but I thought the figures of a pension pot started in your twenties vs thirties is massive.
I may be wrong, but I thought the figures of a pension pot started in your twenties vs thirties is massive.
In my opinion, it makes no sense to a contribute to a pension to a point that: (a) it is causing you to live below a modestly comfortable standard of living today; or (b) means you are taking on (or not discharging) expensive personal (i.e. unsecured) debt.
I don't think you are really saving at all while you are continuing to carry a credit union loan - that's just mental accounting.
There is a good chance you will have the same house and a larger pension pot when you retire ,Lots of people on hear finished up buying an incorrect house when they were single only to find out it did not suit them long term, Anyone who I know who started a pension early never regret doing so later on in life,This is the mistake that everyone makes.
The difference between the final pot is massive if you defer starting saving until your 30s. But if you start saving outside a pension fund in your 20s with a view to buying a house when you are ready, you will probably be in a better position when you retire.
Brendan
The difference between the final pot is massive if you defer starting saving until your 30s.
Apologies if I was unclear, the pension instalments haven't affected living conditions or debt.
You also have to factor in the 40% tax break into your returns,That's really my point - your AVCs are not affecting (as in discharging) your personal debt. IMO paying off your credit union loan should take priority over making AVCs.
Why? Because the rate of interest you are paying on that loan is almost certainly higher than expected net return on your AVCs.
"Mental accounting" refers to people treating accounts (debt/savings) as separate pots, without looking at the overall position. There's no point saving at a rate of X% while simultaneously carrying debt at a rate of X+Y%.
You also have to factor in the 40% tax break into your returns,
lots of people put there AVC against there lump sum of 25% the bigger the pot the bigger the tax free lump sumAnd the fact that you will be taxed on the pension when it's being paid to you.
Brendan
And the fact that you will be taxed on the pension when it's being paid to you.
Yes, 8% of the contributions are coming from the OP's employer.Am I missing something here?
Yes, 8% of the contributions are coming from the OP's employer.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?