gnf_ireland
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@Gordon Gekko do I read into that statement that you are working on the basis of roughly 7% real return from your pension fund per annum on average?If I have the choice to put €10k into my pension now or pay €10k off my mortgage, I have to look at it in the context that I have one shot at that €10k and could be forgoing €40k in my pension at retirement (based on a 7% return over 20 years).
Fair enough, but I guess this is the overall balance between carrying debt and investing in pension funds. There was a while when most of our mortgages were floating around 4.5%, and that would equate to roughly 9% pre tax return. The compounding of a mortgage at this rate of interest can be difficult as well, especially if people have over extended.And the thing with mortgages is that they tend to get paid off anyway. What is the point of being mortgage free 8 years early when the tax rules mean that you can’t backfund your pension with the excess cashflow at that point?
Thanks - this gives me something to work off nowIn my planning, I have always used 4.5% real and net of fees.
Impressive contributions during what is a very expensive period of childcare !Pretty much make full AVCs then pay crèche for 2 wee ones, mortgage, a bit for rainy day and live off what's left.
You should mortgage and remortgage to the hilt and invest it in whatever way is most tax efficient.Gordon Gekko said:(...based on a 7% return over 20 years...)
A question that I often ponder: does the 25% (200k) limit on tax free lump sum have a bearing on anyone's pension planning?
I'm 44 now and should hit that 800k number for pension pot size within 8-10 years max. Assume mortgage paid off and no other debt.
Is anyone using that 800k barrier to drive future plans? For myself, I would quite like to crystallise my pension in my early 50s when I hit the 800k, quit my (high-paying, high stress) career and find new work of my choice without too much concern as to the salary attached. Probably part-time.
Anyone else thinking along these lines? (Or am I the only nutter out there!?)
In a similar situation: 39, well paying but high-stress job, hoping to be mortgage free in a few years and able to retire or just move to something more rewarding/lower stress by 50 (which is also when I can access my pension).
I'm still working a lot of this out*, but there is a huge internet community around this stuff (the key acronym is FIRE (financial independence, retire early) and there is a vast amount of info on both the lifestyle and financial side. For an excellent example of the latter, search for "The Ultimate Guide to Safe Withdrawal Rates" on the earlyretirementnow site (sorry I can't post links).
Thanks for the reply.Thos
I quoted salary to follow the previous examples but my goal is to get to 25 times my annual expenses- what my family need to live on modestly but comfortably which is a totally different number. Creche fees for 2 pretty much wipe out any significant saving outside of the pension, so we put in the max allowable for tax relief and live off the rest.
For your second question, are your 6 choices MAPS or a fund made of other funds? My company plan has and option for that and the option to choose my own funds, albeit from a limited choice of IL funds. I DIY and for now choose 80% in Global equities( which is 100% stock) and 20% in Euro Government Bond fund.
The question was more about direct control of the distribution. So I can pick a fund with 70% shares, 20% bonds, 10% property, or another with different but still 'fixed' distribution, but not decided to pick my own mix.What do you mean not direct control?
You mean you have to request any changes?
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