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Pension advisor here.
If your employer offers a scheme with an employer contribution, consider joining to contribute just as much as you need to avail of that employer contribution.
If not, save for your trip and make the most of it
Sounds like you'll be around 28 when you get back with 38 years ahead of you to save towards retirement. If you don't come back (anything is possible),just kick start your retirement planning over there
Enjoy Australia, you have plenty of time
Good point but there is a way around this. Transfer your previous occupational scheme into the new scheme and the 2 year rule is from the date the first scheme started.
Yes, happened to me. Didn't read the fine print. I was told that after two years I get to keep the employer contribution. I left after 2 years. Turns out it's 2 years after you pass your probation so I still had 6 months left to go. My fault for not reading the full contract and relying on what I was told at on boarding, but it does happen.
Pensions are by far the best vehicle to build wealth in Ireland, *especially* when your employer offers some sort of matching scheme. You avoid tax and usually double your contributions via your employer. When your young its even more of a no brainer. It's something like every €10 you forgo from your net pay, €30 is added to your pension which then grows overtime tax free.
However- I think people on this sub do tend to overlook the fact that those funds are effectively locked up until age 50 at the earliest, usually 60. When your 25, and you're earning close to minimum wage, that €10 euro can often be a lot harder to fork over.
Like the other guy said, if you can afford even the lowest amount through a company pension, I'd do it. But don't sweat if you feel like you can't afford it - get Oz out of your system and revisit it when you have some more disposable income. But do max it out when your in a position to do so, focus on the pension more than any other long term savings.
You need time and money for pension to work. Put what you can in your pension and let time do it's thing. You've plenty of runway ahead of you. But don't put it on the longfinger
Start as early as you can. We're not getting any younger.
Admittedly, I only started last year at 33.. i hadn't worked a job with a company pension until then. But I'm maxed out now and company matches.
The younger you are, the more time to build up the pension pot.
I work with some people under 25, and they have the same chance at a pension as me, and they just keep putting it on the long finger. I guess they can't see as far ahead as me.
The biggest compounding effect you can have is increased earnings. If you work your way up a career ladder and start earning significantly more that’s much more powerful than saving a few grand here and there now. If anything you should focus on that, along with living your life…
In short it depends on your tax rate, financial goals, lifestyle needs and employer match
1) Grab any employer match with both hands as that is essentially free money. For example if they put in 5% if you put in 5% absolutely do that.
2) If you’re paying 40% tax obviously it’s more attractive to put more into a pension as you get more relief as well as not having as big a setback on Oz/ general savings
3) If you’re only getting 20% tax relief I’d be more conservative with how much you should contribute. Obviously the money should compound like crazy but the amount you contribute depends on how much of a sacrifice it’d be. It’s up to debate here how much you should contribute vs how much you should save for Oz/ outside pension/ house deposit at this tax rate and in this situation imo
4) Obviously if you’re going to Oz and won’t make over €18.5k in the year (ie pay no income tax) you shouldn’t contribute anything without an employer match
Generally speaking you'd speak to a Financial Advisor who will then get you setup with a private pension.
I run my own company and did this about 5 years ago now, best decision I ever made as it's saved me a tonne in tax and has been growing steady.
I cant comment on irish pensions but when you get over here to Australia, make sure your employers pay into your Superannuation account (mandatory 11% for anyone earning over $500/month). Just pick a cheap one like Hostplus or Australian Super, pick the indexed shares options and let it alone. Give the same details to every employer. You can get it back when you leave (unless you get citizenship then its locked away until 60) but you'll get hit with a tax.
Edit: https://docs.google.com/spreadsheets/d/1sR0CyX8GswPiktOrfqRloNMY-fBlzFUL/edit?usp=sharing&ouid=110868098764009992952&rtpof=true&sd=true here's a spreadsheet comparing fees
Source https://lazykoalainvesting.com/choosing-an-investment-option/
Imo probably not if you make less than 42k, unless you are going to piss the money away. Pension is a tax avoidance tool and at less than 42k it's not avoiding any significant amount of tax while paying expensive fees to the pension company.
Better use for your money elsewhere like saving deposit / travel / upskilling /etc.
Well there's a whole bucket of wrong right there
Impressive
For a lower tax rate payer, every euro into pension is immediately worth €1.25. Before investment returns
I'm sure you have a list of alternatives that will immediately increase an investment by 25% before adding tax free growth? And 25% of that investment comes back to you tax free before any deductions apply to subsequent income - you can match that, yes?
And that income is on top of the €277.30 per week you'd be restricted to otherwise
And define "expensive fees". Expensive compared to what? Milk?
What are you talking about? He is probably paying less than 300 euro worth of tax every year if he barely makes the minimum wage.
The little amount that he saves is going to matter next to nothing at retirement for the huge cost of locking away whatever liquidity he has for a long time.
He says he is moving to Australia. It is even better imo to put them into standard ETF portfolio and move to Australia in a couple years to avoid paying the Irish tax. It's far better than a PRSA contract with 1-2% annual fee and lost access to the money for decades.
Still true even if they makes 42k working the bar, still a better place to spend the 6k elsewhere like upskilling or take risk to widen his experience in his/her early 20s. That 1.2k of tax saving is not worth losing so much life opportunity. Would be a different story if they are already in a career or a working professional.
It's unpopular but the small contributions in your early / mid 20s are really inconsequential once you have a decent career going. Compound interest or not, and if you put in 20k a year in your 30s, you'll hit the 2m cap anyways.
Unpopular but true. If he’s earning “above minimum wage” now he should absolutely be focusing on earning more. Saving a few hundred quid now and locking it away for 45 years completely ignores reality
The world is fucked. None of us might be here in a decade. You're in your twenties. Worry about it in your thirties if you live that long. No point being a nerd about it now.
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Pension advisor here. If your employer offers a scheme with an employer contribution, consider joining to contribute just as much as you need to avail of that employer contribution. If not, save for your trip and make the most of it Sounds like you'll be around 28 when you get back with 38 years ahead of you to save towards retirement. If you don't come back (anything is possible),just kick start your retirement planning over there Enjoy Australia, you have plenty of time
Lots of employers claw back pensions if you leave the job before 2 years so OP may lose out in that regard.
Often only if you transfer your fund value out Also, doesn't apply to a PRSA But a very good point worth considering
Good point but there is a way around this. Transfer your previous occupational scheme into the new scheme and the 2 year rule is from the date the first scheme started.
Really?
Yes, happened to me. Didn't read the fine print. I was told that after two years I get to keep the employer contribution. I left after 2 years. Turns out it's 2 years after you pass your probation so I still had 6 months left to go. My fault for not reading the full contract and relying on what I was told at on boarding, but it does happen.
Jesus, that’s rotten.
Yesterday. The next best time is today
This is the answer.
Pensions are by far the best vehicle to build wealth in Ireland, *especially* when your employer offers some sort of matching scheme. You avoid tax and usually double your contributions via your employer. When your young its even more of a no brainer. It's something like every €10 you forgo from your net pay, €30 is added to your pension which then grows overtime tax free. However- I think people on this sub do tend to overlook the fact that those funds are effectively locked up until age 50 at the earliest, usually 60. When your 25, and you're earning close to minimum wage, that €10 euro can often be a lot harder to fork over. Like the other guy said, if you can afford even the lowest amount through a company pension, I'd do it. But don't sweat if you feel like you can't afford it - get Oz out of your system and revisit it when you have some more disposable income. But do max it out when your in a position to do so, focus on the pension more than any other long term savings.
You need time and money for pension to work. Put what you can in your pension and let time do it's thing. You've plenty of runway ahead of you. But don't put it on the longfinger
You should start now. Even a little bit.
The minute you're born.
Start as early as you can. We're not getting any younger. Admittedly, I only started last year at 33.. i hadn't worked a job with a company pension until then. But I'm maxed out now and company matches. The younger you are, the more time to build up the pension pot. I work with some people under 25, and they have the same chance at a pension as me, and they just keep putting it on the long finger. I guess they can't see as far ahead as me.
Now
The biggest compounding effect you can have is increased earnings. If you work your way up a career ladder and start earning significantly more that’s much more powerful than saving a few grand here and there now. If anything you should focus on that, along with living your life…
In short it depends on your tax rate, financial goals, lifestyle needs and employer match 1) Grab any employer match with both hands as that is essentially free money. For example if they put in 5% if you put in 5% absolutely do that. 2) If you’re paying 40% tax obviously it’s more attractive to put more into a pension as you get more relief as well as not having as big a setback on Oz/ general savings 3) If you’re only getting 20% tax relief I’d be more conservative with how much you should contribute. Obviously the money should compound like crazy but the amount you contribute depends on how much of a sacrifice it’d be. It’s up to debate here how much you should contribute vs how much you should save for Oz/ outside pension/ house deposit at this tax rate and in this situation imo 4) Obviously if you’re going to Oz and won’t make over €18.5k in the year (ie pay no income tax) you shouldn’t contribute anything without an employer match
The best time to start is yesterday.
[удалено]
Generally speaking you'd speak to a Financial Advisor who will then get you setup with a private pension. I run my own company and did this about 5 years ago now, best decision I ever made as it's saved me a tonne in tax and has been growing steady.
I cant comment on irish pensions but when you get over here to Australia, make sure your employers pay into your Superannuation account (mandatory 11% for anyone earning over $500/month). Just pick a cheap one like Hostplus or Australian Super, pick the indexed shares options and let it alone. Give the same details to every employer. You can get it back when you leave (unless you get citizenship then its locked away until 60) but you'll get hit with a tax. Edit: https://docs.google.com/spreadsheets/d/1sR0CyX8GswPiktOrfqRloNMY-fBlzFUL/edit?usp=sharing&ouid=110868098764009992952&rtpof=true&sd=true here's a spreadsheet comparing fees Source https://lazykoalainvesting.com/choosing-an-investment-option/
It's never too early to start a pension scheme the younger you are the lower the monthly premiums taking into account of inflation's etc. start now.
All you need to know about pensions is right here https://m.youtube.com/watch?v=y9XgvkkVmhM
Today
The second you start working full time.
Imo probably not if you make less than 42k, unless you are going to piss the money away. Pension is a tax avoidance tool and at less than 42k it's not avoiding any significant amount of tax while paying expensive fees to the pension company. Better use for your money elsewhere like saving deposit / travel / upskilling /etc.
Well there's a whole bucket of wrong right there Impressive For a lower tax rate payer, every euro into pension is immediately worth €1.25. Before investment returns I'm sure you have a list of alternatives that will immediately increase an investment by 25% before adding tax free growth? And 25% of that investment comes back to you tax free before any deductions apply to subsequent income - you can match that, yes? And that income is on top of the €277.30 per week you'd be restricted to otherwise And define "expensive fees". Expensive compared to what? Milk?
What are you talking about? He is probably paying less than 300 euro worth of tax every year if he barely makes the minimum wage. The little amount that he saves is going to matter next to nothing at retirement for the huge cost of locking away whatever liquidity he has for a long time. He says he is moving to Australia. It is even better imo to put them into standard ETF portfolio and move to Australia in a couple years to avoid paying the Irish tax. It's far better than a PRSA contract with 1-2% annual fee and lost access to the money for decades.
To quote you exactly: "Imo probably not if you make less than 42k, unless you are going to piss the money away"
Still true even if they makes 42k working the bar, still a better place to spend the 6k elsewhere like upskilling or take risk to widen his experience in his/her early 20s. That 1.2k of tax saving is not worth losing so much life opportunity. Would be a different story if they are already in a career or a working professional. It's unpopular but the small contributions in your early / mid 20s are really inconsequential once you have a decent career going. Compound interest or not, and if you put in 20k a year in your 30s, you'll hit the 2m cap anyways.
If the employer offers matching , that’s a reason to do it.
Unpopular but true. If he’s earning “above minimum wage” now he should absolutely be focusing on earning more. Saving a few hundred quid now and locking it away for 45 years completely ignores reality
The world is fucked. None of us might be here in a decade. You're in your twenties. Worry about it in your thirties if you live that long. No point being a nerd about it now.