Tuesday 6 December 2016

'I lived the high-life and I didn't save a penny but now I've no pension'

After living the high-life for a decade, Chrissie Russell, now in her 30s, realises she has no nest egg for the future

Published 18/05/2016 | 02:30

Taxman's taking all my dough: Freelance writer Chrissie Russell says she can’t afford to save for a retirement fund.
Taxman's taking all my dough: Freelance writer Chrissie Russell says she can’t afford to save for a retirement fund.

I'm not a risk taker. I wear sunscreen, I don't play the stock market, I don't even tend to take chances with yoghurts that are a day past their use-by-date. But I'm taking a massive gamble on my financial future.

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This week it was revealed that people aren't putting away enough towards their pension plans. According to a survey, released yesterday and commissioned by Irish Life, the average amount squirrelled away for retirement is just 10pc of salary when it needs to be around 15pc.

Well, how about zero percent, nothing for the last decade and zilch for the foreseeable future?

I'm 35, self-employed and without a personal pension plan. I take some solace from the knowledge that I'm not the only one. Not too long ago a poll found that just over half of Irish working adults had no retirement fund and many who did had no real idea of what they were actually paying into it.

Initially it was something I always expected my employer would take care of. But, bar a brief spell in 2004, I've been freelance all my working life. And, as one of Ireland's 17.4pc of the workforce that is registered self-employed, I'm coughing up so much in tax that there's really not enough left over to save for the future.

Compared to those in the PAYE system, those self-employed can claim less in tax credits and expenses while paying more PRSI. Yes, my contributions mean I can potentially access the State pension down the line, but increasingly that seems like it'll not be sufficient to live on, if it's even there in 30 years' time.

Life turned upside down: Chrissie Russell with baby Tom
Life turned upside down: Chrissie Russell with baby Tom

I work from home so I can look after my toddler (I would barely break even financially if I was to put him in childcare) so by the time I've put away some 20pc of my earnings for tax, 10pc for emergency savings and stumped up for mortgage payments, insurance, heating and food, it's hard enough to cobble together enough on a month-by-month basis, never mind worrying about what's going to happen post 68.

Saving an additional 15pc for a pension? Forget it. Incidentally, I used to have savings but putting down a €30,000 deposit for a modest two-bedroom home, saw the end of that.

I could blame the tax system, I could whinge about the poor earning potential in print journalism. I could even blame the education system - surely instead of learning about tangents and the value of x, those maths classes could have been better spent teaching me how to save, understanding interest rates and learning about where best to invest?

But actually I blame myself. Like a lot of people, I spent my 20s frittering away my money and giving no thought at all to the future. Clothes, holidays... and nothing to show for it. I must have spent thousands on nights out I can't even remember.

If I could turn back time I'd start putting money away from my first ever babysitting shift in the mid 1990s.

It's not cool, and it's certainly not as much fun as a teenage afternoon in Topshop, but the reality is that saving is actually very easy to do, if you start early.

A few years ago I read Mary Waring's brilliant book, A Man Is Not A Financial Plan, which terrified me (I fit the bill of her 'bad' case study in almost every chapter) but also drove home how starting to save a little and often will reap far greater rewards than waiting until you're in your 30s, as most people do.

In the example she gave, the 20-something saver who put away €25 a month in a 5pc interest account had €38,000 when she was 60, compared to the 30 something who saved 75pc the amount but ended up with half as much money because she'd missed out on the interest. Admittedly, finding a good interest rate is a bit of a battle these days, but I reckon all of us could save €25 in our 20s. I know I could have.

As it is, I'm more or less stuck between the grim 'pension plan' options of lotto win, hoping my husband has enough in his pension to cover us both and/or assuming my parents will leave me money when they die - cheery, eh?

It's depressing, and one of the many reasons why it's easy for me (and I'm sure others like me) to push money worries to the back of my mind. But the trouble with money worries is if you don't address them, they just get worse.

Of course I'm thankful for what I have. I'm fortunate to be earning, lucky to have managed to get my first foot on the housing ladder, and very lucky to have the help of my parents when it comes to providing occasional free childcare.

But at the same time it's hard not to feel hard done by. Like many of those cited in the Irish Life research, I'm dedicated to my work and work hard, but it's disappointing that hard work alone doesn't ensure financial reward.

The good news is, I have decided the next generation will be different and have a regular savings account set up for my son, which already looks a lot healthier than my own.

Of course, there was another survey out yesterday that revealed 46pc of parents had taken money from their child's bank account... but I promise that won't be me.

Irish Independent

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