# Advice needed: Start Pension or continue saving (for 1st house)



## m.sunny (8 Oct 2010)

Hi there
Self-employed, 39yrs old, recession has seen my annual income has reduced from approx 36k+, to 23k (nett), spouse (30yrs old) income 33k.

I am conscious of starting a pension, and hoped to do so this year, spouse has no pension either, but is not as concerned at the moment. 

We are hoping to buy our first house in the next year or 2 (in Dublin, both FTB), and therein lies my dilemna - to begin a pension I would need to reduce my monthly savings, yet I fear this will affect our prospects when it comes to buying a house (i.e. less deposit for the house etc).

currently have approx 35k savings (25k joint, 10k credit union), but would like to be able to approach the bank with minimum 50k deposit in order to help our chances of getting a mortgage. We have 1 car loan of 3500, no other debts. We are trying to save at least €500 a month where we can.

I hoped someone with better knowledge could advise me the route? someone suggested i should wait til i get a mortgage/home before considering starting a pension, hence my confusion...

many thanks,
Sunny


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## marti18 (8 Oct 2010)

honestly i would totally forget about a pension PERIOD!   do not even listen to people telling you it will be worth X amount in 30years time.......if you are buying a house well now is a great time as house prices are fantastic for FTB and real deals are out there

as for the car loan, personally i wouldnt buy a car if i couldnt afford it-meaning if i didnt have the cash then NO buy even if its a 2000E car. payy the car off but please forget aabout a pension


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## pinkyBear (8 Oct 2010)

Hi there, Mr. Bear and I put 20% of our salaries into our pension and have done for a few years. We were switching mortgages a few years ago and we asked about the AVC contribution. 

We were told by our broker that because it is an optional saving, we could at some point change what we input into the pension.

If I were you, I would put money into a pension - as you are 39 and while you do have substantial savings you will need money when you retire...

P..


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## marti18 (8 Oct 2010)

pinkyBear said:


> Hi there, Mr. Bear and I put 20% of our salaries into our pension and have done for a few years. We were switching mortgages a few years ago and we asked about the AVC contribution.
> 
> We were told by our broker that because it is an optional saving, we could at some point change what we input into the pension.
> 
> ...


 
totally disagree......whats the value of your pensions now vs the money you have invested in?     now would be an ideal time to buy a house of your choice   Oh i wish!


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## pinkyBear (8 Oct 2010)

Hi marti, my pension is up!!! I have been doing this for 5 years! The reality is though its not up by a huge amount. However I want to live on something when I'm retired other than a state pension. 

Currently with pensions the tax break does make it worth it, if you are in the 40% bracket. I am roughly the same age as the OP, and i think it is important that I make some provision for my retirement.


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## marti18 (8 Oct 2010)

pinkyBear said:


> Hi marti, my pension is up!!! I have been doing this for 5 years! The reality is though its not up by a huge amount. However I want to live on something when I'm retired other than a state pension.
> 
> Currently with pensions the tax break does make it worth it, if you are in the 40% bracket. I am roughly the same age as the OP, and i think it is important that I make some provision for my retirement.


 

Pinky im in the exact same position and work for the government but as far as my pension well enough said......i just think it would be worth his while buying now a house with a big cash deposit due to the fact that there is great deal going on at the moment.

i would buy house first then put pension on the long finger. at the end of the day at least he has a home which is still worth X amount rather than a pension which may never perform nomatter what people say


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## pinkyBear (8 Oct 2010)

> Pinky im in the exact same position and work for the government


If you work for the government isn't your pension guarenteed? assuming you are permanent. 

The OP need not part with his lump sum! There are PRSA's and other options. The OP can do both, use lump sum for house and contribute to pension..


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## marti18 (8 Oct 2010)

pinkyBear said:


> If you work for the government isn't your pension guarenteed? assuming you are permanent.
> 
> The OP need not part with his lump sum! There are PRSA's and other options. The OP can do both, use lump sum for house and contribute to pension..


 
sorry to say this but nothing is guarenteed in this country. NOTHING!

i agree with your second point as in puttung house first then pension second or third or forth or........


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## pinkyBear (8 Oct 2010)

> sorry to say this but nothing is guarenteed in this country. NOTHING!


 
You do realise that words writen in bold in the internet is taken to mean shouting!! 
The reality is if you are a state employee you do have better pensions that those in the private sector. I know you dont know exactly what your pension will be when you retire however trust me your unions will fight all changes!!!

If you do work in the public sector - are you really in a position to advise someone how to manage a pension?? And please dont take offence, but you do have some guarentee...


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## T McGibney (8 Oct 2010)

pinkyBear said:


> Hi there, Mr. Bear and I put 20% of our salaries into our pension and have done for a few years. We were switching mortgages a few years ago and we asked about the AVC contribution.
> 
> We were told by our broker that because it is an optional saving, we could at some point change what we input into the pension.
> 
> ...



Two observations:

1. Much of the conventional wisdom in relation to personal finance has been turned on its head in the past few years. What was good advice then may well not apply now.

2. I'm just wondering if your mortgage broker and your pension broker are the same person?


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## pinkyBear (8 Oct 2010)

> just wondering if your mortgage broker and your pension broker are the same person?


 
No.. Both our pensions are part of a work schemes - we both contribute full AVC voluntarily into them.


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## marti18 (8 Oct 2010)

pinkyBear said:


> You do realise that words writen in bold in the internet is taken to mean shouting!!
> The reality is if you are a state employee you do have better pensions that those in the private sector. I know you dont know exactly what your pension will be when you retire however trust me your unions will fight all changes!!!
> 
> If you do work in the public sector - are you really in a position to advise someone how to manage a pension?? And please dont take offence, but you do have some guarentee...


 
Pinky sorry for using bold written word. no offense!  im serious when i say that my pension is not guarenteed and same canbe said for my job. the government can make changes whether you like it or not and union or no union it really does not matter. you can scream protest or try anything else as the fact is that the country is ina massive mess and cut backs or redundancies can be directed at anyone.......unless your a politician!


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## pinkyBear (8 Oct 2010)

> redundancies can be directed


 I know! Howoever the OP is asking whether or not they should set up a pension, we all know the state the country is in.

It is our responcibility to ensure we have enough to retire on. So to answer the OP's question



> hoped someone with better knowledge could advise me the route? someone suggested i should wait til i get a mortgage/home before considering starting a pension, hence my


 Yes. The younger you start the better.


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## niceoneted (8 Oct 2010)

My advice would be to buy the house as the older you get the shorter the mortgage term you will be eligible for and also life assurance that you will be required to take out will get more expensive. I would say be very frugal for the next say 6 months and accelerate your savings to try to get as near to the 50k as possible and also clear the loan. 
The earlier you buy the earlier you will have it paid off. Think of it too that you should have your mortgage cleared by the time you retire. 
Once you buy the money I assume you are paying on rent will hopefully cover the mortgage so as the money you are currently saving can be put into a mortgage.


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## pinkyBear (8 Oct 2010)

Hi there,
I was watching Frontline or Primetime some time ago, and an economist was talking about "savings" and how much money is "saved" in Ireland. He said that mortgage payments were considered as savings, because the person is working tworads owning a house...


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