I understand you either buy an annuity or arf. https://www.zurich.ie/pensions-reti...e between ARF,remain in the investment market.
I understand you either buy an annuity or arf. https://www.zurich.ie/pensions-reti...e between ARF,remain in the investment market.This is a topic very much on my mind recently and maybe I am worrying more than I should be as well.
Maybe a silly questiin, but is there a guide on how to figure out what your private pension income will be.
For simplicity, say I have a pension value of 100k.
I retire at 60.
I take 25% tax free, leaving 75k in the pot.
How is the annual pension amount thereafter determined?
Nobody knows how long I will live, so how do they decide what the annual amount will be?
Is there a rough guideline that the pension companies use?
Say I am 35 today with a mortgage of 30 years and an extra 1,000 EUR available per month. I plan to retire at 65.
Is it better to use the 1k to pay off the mortgage each month and when that is paid off divert the extra funds to pension AVCs. Or is it better to put 1k into AVCs now and let the mortgage clear after 30 years?
I see the benefit of AVCs now is a longer timeline for growth plus inflation would theoretically reduce my mortgage value over 30 years.
Without any other information I would agree.I would favour pension.
Agreed, assuming higher rate tax rate payer and mortgage interest rate is not crazy high.Without any other information I would agree.
You should probably provide a full money makeover in order to get better feedback.
My siblings and I have recently got power of attorney for our Mum who has mild ish dementia. She doesn't have a huge amount of assets amd needs it to fund good quality residential care. It turns out that she has locked 70% of her savings in an entirely inappropriate product that pays a monthly return and then pays out the original lump sum to her estate on death. She wanted to keep her money by for us when she dies even though we are all doing well financially. It's so frustrating. We always told her to spend her money on herself. I think we can unwind the investment to pay for her care but there was a while when we thought the penalties would be enormous.Absolutely excellent thread, especially first page.
DublinHead54 makes a valid point which is one of larger variables that people do not always appreciate. I am also a high earner, but the job is arguably unsustainable, and even if I do climb the ladder and make very good money, it could be over in 6 months. The reality is most of us in great paying jobs wont end up with no income at all, but it is hard to know where income could fall to, and for how long their may be a gap with nothing.
That brings me back to Brendans post though, you can not be in a good job and fretting and stressing over the rainy day. I am certainly guilty of that, over thinking many bigger purchases (and maybe saving a few euro by doing so, but also consuming far too much time and mental capacity, that could be spent enjoying life a bit more).
Not sure what the solution is to that conundrum but I certainly find myself in the space that an observer at a distance would suggest is unnecessary. I think this is ultimately why many people try to pain down their mortgage quickly too, it is often a reduction in a perception of risk exercise not a smart financial move, in times with interest rates below ~3% paying into pensions or a fund will be more lucrative and liquid
P.s not sure Brendan was saying that living on state pension is perfectly fine, I think he was suggesting it is ok, but IF you own a home you can utilise the home for cash - there is too many people trying to leave a home to their kids as inheritance, which in many cases is absolutely not necessary but comes at a huge cost to those trying to achieve it. It is nice to leave some inheritance to offspring, but not necessary, and certainly not a smart priority if kids are doing fine for themselves.
My siblings and I have recently got power of attorney for our Mum who has mild ish dementia. She doesn't have a huge amount of assets amd needs it to fund good quality residential care. It turns out that she has locked 70% of her savings in an entirely inappropriate product that pays a monthly return and then pays out the original lump sum to her estate on death. She wanted to keep her money by for us when she dies even though we are all doing well financially. It's so frustrating. We always told her to spend her money on herself. I think we can unwind the investment to pay for her care but there was a while when we thought the penalties would be enormous.
A bit of missed context from me. This was in Spain via her bank where she was living. She is now in the UK. The bank branch staff are being super helpful and we just don't need another job to fight this right now. It was more an example of how old people can be fixed on the idea of passing the inheritance.Did an adviser recomment it to her? Perhaps there’s some comeback against them? There might be merit in you guys funding the care as you’d get relief at the 40% rate.