Start pension at age 43?

Discussion in 'Pensions' started by Foodie1, Dec 20, 2016.

  1. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,837
    Plenty I would venture if they are willing to make sacrifices. I deliberately used a modest salary to illustrate the power and tax efficiency of a pension.

    And in any event, the counterargument being presented thus far is that 43 is "too late" and that pensions are somehow a grand swindle. Surprise surprise, when those arguments are blown out of the water, others magically appear.
     
  2. moneybox

    moneybox Frequent Poster

    Posts:
    715
    Can you explain why 60℅ of private sector workers have no pension. If they are only on the marginal rate of tax it is not worth their while.
     
  3. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,578
    Eh, I didn't say that anybody suggested doing nothing. I simply asked what was your alternative suggestion?

    Moneybox has suggested putting it under the mattress in which case it will inevitably lose a considerable amount of purchasing power over the next 22 years. Can you remember what a pint of milk cost 22 years ago?
     
  4. PyritePete

    PyritePete Frequent Poster

    Posts:
    380
    Make sacrifices ? Isn't that what paying into a pension fund at 43 would be doing ?

    Paying into a pension at 43 is madness. No counter-argument needed from someone who already decided not to do this. What did you do regarding your situation, if you dont mind me asking ?

    Who mentioned it being a great swindle ?

    If these (counter) arguments are so compelling then why didn't I do it ? Please advise.
     
  5. LS400

    LS400 Frequent Poster

    Posts:
    287
    Last edited: Dec 20, 2016
    I think Foodi could answer the question about being in a position to contribute so much over such a long period, as this is her question.

    But, and as pointed out above, most 43 year olds would not be in that luxurious position, so, well put and detailed as you have it Gordon, this would not be the road for many 43 year olds.
     
    Last edited: Dec 20, 2016
  6. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,578
    Because they are badly advised?

    Again, what's the alternative? I assume you weren't serious about the mattress stuffing option.
     
  7. moneybox

    moneybox Frequent Poster

    Posts:
    715
    ...Well they can put it in a savings account and hopefully over time interest rates will rise, at least no one can get their hands on it only the saver.
     
  8. PyritePete

    PyritePete Frequent Poster

    Posts:
    380
    apologies Sarenco, I misinterpreted your post.

    Your other post about being badly advised may hold some water.

    Paying an additional 900 p/m or €10k per year on top of other outgoings at 43 may also explain why 60% of private sector workers dont have a pension.

    In my situation, I acknowledged that it "went against the grain" not to start a pension fund at a similar age (give or take) to the OP but I decided it was the best course of action.
     
  9. moneybox

    moneybox Frequent Poster

    Posts:
    715
    Over a million Irish workers earn less than €30,000 a year, how can they afford to pay into a private pension with that sort of money plus pay all the other demands on them like astronomical rents, child care insurances etc etc.
     
  10. moneybox

    moneybox Frequent Poster

    Posts:
    715
    Over a million Irish workers earn less than €30,000 a year, how can they afford to pay into a private pension with that sort of money plus pay all the other demands on them like astronomical rents, child care insurances etc etc.
     
  11. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,578
    Have you considered the possibility that you don't fully understand how pensions work?

    They can.

    But they would then have to pay income tax on the savings and then pay DIRT at a larcenous rate on the interest. Pension contributions are made before deduction of any income tax and any investment income or capital gains can roll-up tax free once inside the pension wrapper.
     
  12. PyritePete

    PyritePete Frequent Poster

    Posts:
    380
     
  13. SBarrett

    SBarrett Frequent Poster

    Posts:
    2,086
    As long as you have something to provide you with an income in retirement, it doesn't matter what investment you have. Pensions are just the most tax efficient method. Saying 23 years of investment is too short is incorrect though. Would you say the same about buying an investment property, where after paying off all the debt and interest, you probably wouldn't begin to see a return until that length of time.

    People give out about the charges of pensions but charges have never been lower. Gone are the days when a broker got paid 60% of the first year's premium and the management fee was 4.5%! Now you can expect to pay 1% amc. Work out the difference over 23 years.

    People are always giving out about pensions not performing. It's not the pension, that's just an investment vehicle. It's the funds you have invested in and usually the investor moving in and out of funds all the time or leaving the money in cash for a prolonged period. Pick a fund with a decent amount of equity exposure and leave it for 20+ years and you'll do fine. Messing around will only cost you money.

    Steven
    www.bluewaterfp.ie
     
  14. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,578
    @PyritePete

    I have read your posts. Carefully.

    You asked why you didn't contribute to a pension and I simply asked whether there was a possibility that you didn't fully understand how pensions worked. Lots of people don't.

    If you did fully understand how pensions worked and there was some other reason why you still decided not to contribute to a pension, could you tell us what it was? I'm not having a go, it's a genuine question.
     
  15. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,837
    Insane advice. Utterly insane. Beyond ridiculous.
     
    trasneoir likes this.
  16. moneybox

    moneybox Frequent Poster

    Posts:
    715
     
  17. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,837
    "Paying into a pension at 43 is madness"

    This is one of the most incredible statements I've ever read on AAM.

    To answer your question, when I started working after college, I earned very little whilst training, but my employer would pay 5% of my salary into a pension fund if I matched it with 5%, so I did, even though I was a lower rate taxpayer. It was a no-brainer. The fund has grown at a decent rate and followed me whenever I've moved jobs. Charges have always been minimal. Now I'm in my 30s and I contribute the maximum allowable amount to my pension fund. I will continue to do so, and my employer will continue to juice that up with a meaningful level of contribution on their side. Pension funding is low hanging fruit in terms of building wealth. It really is.
     
  18. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,837
    And I challenge the argument that a 43 year old on €50,000 a year can't find €5,000 to secure his/her future.

    As for why so many people don't fund pensions...the State Pension is probably adequate for a huge amount of people. Retiring on €12,000 a year when you've earned €25,000 a year is arguably no hardship.
     
    moneybox likes this.
  19. LS400

    LS400 Frequent Poster

    Posts:
    287
    Gordon,
    The point being made, is starting a pension at 43, not, as you are quoting, paying into a pension at 43.
    Completely different scenarios.
     
  20. LS400

    LS400 Frequent Poster

    Posts:
    287
    Stephen,

    I would much rather invest in a property at that age than start a pension.
    There are so many reasons that out weight this.

    10 years into the pension, god forbid your circumstances change..your goosed unless you can continue with the same payments and employers contributions.