Pension in your twenties

Talking Money said:
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.
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talking money
Is there assets tied up in your credit Union loan that you cannot touch until loan is paid off in full . always factor in the amount credit union insist on having to keep on deposit until loan is paid off when you look at the % charged ,As the loan shrinks insist savings required as backing are transferred to pay loan off faster,
 
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RichardTea said:
If I was to take out a mortgage of 140k (the max I could borrow - which would pay for appoximately half of a two bedroom house in the northside of Dublin) the interest alone would be around 5.5k per year - effectively 11k which could be put into pension instead, and there are no guarantees house prices are going to continue to rise. I'm currently living in the west where the market seems very slow and rent is cheap enough to not be a huge concern. I will probably move to Dublin in a few years, so not being tied down to a property is certainly helpful in your 20s.
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Richard

This strongly suggests that you should not be contributing to a pension as you can't afford it.

You do not need to buy a house now while your accommodation is cheap and while you don't expect to live there for very long.

But your circumstances may change. You and, maybe a future partner, might want to buy a house together in Dublin. But you may well be borrowing 90% to buy a house you don't really want while looking at a load of your own money inside a pension cage which you can't access.

When your plans are uncertain, the right thing to do is to keep your money accessible. That trumps everything else.

Brendan
 
Firstly, thank you all for the opinions - it is gladly received.

From advice here and reviewing all said, I won't increase my pension contributions by a further 3K this December. I think I will place a standing order for the after tax amount to a savings account, that account can either be eventually be a house fund or a travel fund if I decide to take a career break over the next few years.

As my employer pays 8%, I pay 5% plus AVC of 6% - I wonder after reading this thread would I be best just to match the employers contribution* (*Although I don't need to pay more than 5% to get their 8%). Then it would be Employer 8%, me 5% plus 3% AVC - as I mentioned earlier the extra 3% isn't felt in my pay package, although it is helpful bringing down the top rate of tax.


jjm2016 said:
talking money
Is there assets tied up in your credit Union loan that you cannot touch until loan is paid off in full . always factor in the amount credit union insist on having to keep on deposit until loan is paid off when you look at the % charged ,As the loan shrinks insist savings required as backing are transferred to pay loan off faster,
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Yes, shares are held against the loan.

No non money physical assets are held against this, I am paying ahead of schedule and more than agreed expecting this loan to be gone by Dec 2018 or so, ideally I would like to replace the loan with a standing order to save.
 
Talking Money said:
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.
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I had missed this because I was focusing on the main question. Your financial priority is to clear this very expensive credit union loan.
If you have a loan of €10,000 @12% and shares of €5,000 @0%. you are paying 24% APR on your net loan of €5,000.

You don't need a rainyday fund if you have a good record with the credit union.

Ask them to set the shares against the loan. They will probably refuse. But push them. Then liquidate enough of your assets if there is no penalty to clear this loan.

Brendan
 
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Brendan Burgess said:
I had missed this because I was focusing on the main question. Your financial priority is to clear this very expensive credit union loan.
If you have a loan of €10,000 @12% and shares of €5,000 @0%. you are paying 24% APR on your net loan of €5,000.

You don't need a rainyday fund if you have a good record with the credit union.

Ask them to set the shares against the loan. They will probably refuse. But push them. Then liquidate enough of your assets if there is no penalty to clear this loan.

Brendan
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Lots of time on askaboutmoney you see advice given on having a large emergancy fund the never ask if the have a sick pay/health insurance which should be factored to the size of fund required especially if the are single ,The best advice any one can give anyone is after there mortgage look very careful at the cost of any loans the take out. some people take out loan from credit unions before it is paid off they get a top up while still paying money into buying shares finish up paying very high % when you look at the amount of money backing up such loans,
 
jjm2016 said:
Lots of time on askaboutmoney you see advice given on having a large emergancy fund the never ask if the have a sick pay/health insurance which should be factored to the size of fund required especially if the are single ,The best advice any one can give anyone is after there mortgage look very careful at the cost of any loans the take out. some people take out loan from credit unions before it is paid off they get a top up while still paying money into buying shares finish up paying very high % when you look at the amount of money backing up such loans,
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in a long standing climate of cheap credit , is it any wonder people are so slow to pay down debt ?
 
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