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Do you have a pension?
Thread poster: SusieSmith

Rachel Waddington  Identity Verified
United Kingdom
Local time: 18:58
Member (2014)
Dutch to English
+ ...
Yes I do Dec 31, 2016

I think you may feel differently as you approach retirement age and have no option but to keep on working until you drop. Even if you are lucky enough to remain in good health you do slow down both physically and mentally as you get older and there are plenty of ailments that could make it hard for you to concentrate fully or sit at a desk for hours on end. Keeping on doing a bit of work for my favourite clients is part of my vision for retirement too, but the thought of never being able to stop... See more
I think you may feel differently as you approach retirement age and have no option but to keep on working until you drop. Even if you are lucky enough to remain in good health you do slow down both physically and mentally as you get older and there are plenty of ailments that could make it hard for you to concentrate fully or sit at a desk for hours on end. Keeping on doing a bit of work for my favourite clients is part of my vision for retirement too, but the thought of never being able to stop makes me shudder.Collapse


 
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Tom in London
United Kingdom
Local time: 18:58
Member (2008)
Italian to English
State pension Dec 31, 2016

SusieSmith wrote:

What are your thoughts on pensions for self-employed translators? Do you have one?

Personally, I have never actually set one up. Firstly, because I do not 100% trust the pension companies but mainly because I do not really intend to retire. I will keep working as long as I can.

I think my job will help to keep my brain active, I do not need to leave the house so any physical issues in old age will not be a major issue.

If my mental capabilities decline and I am no longer able to translate, I will most likely not be able to enjoy the money from a pension anyway. Then I would just rely on the state (I live in the UK) to look after me while I stare at the TV all day.

I would prefer to spend my money on a larger house for my family, sending my children to good schools, supporting them through university and generally living life to the fullest. Also, my husband has a company pension which will help when he retires.


I can assure you that if you take care of your health your mental faculties will not desert you - in fact, translating work is a mental challenge that will certainly keep you sane. You **do** need to leave the house, because if you don't go out and get regular exercise, physical issues in old age **will** be a major issue!

I don't intend to retire either but nor do I intend to kill myself working just to keep a roof over my head. Everyone needs to make their own arrangements but arrangements do need to be made.

Like you however, I don't trust the private pension companies either. At one time I did start paying into a private pension called Equitable Life, which then went bankrupt. Luckily before that happened I had withdrawn from the scheme and had got my money paid back.

I strongly recommend the UK State Pension. You should make sure you pay in the maximum permitted including any previous years you may have missed. I am now drawing a UK State Pension, which brings me in a very welcome £450/month. You shouldn't be relying on your husband for money. This is 2017....nor should you be pampering your children or giving them an unfair advantage in life. People should be made to learn how to make their own way.

[Edited at 2016-12-31 10:53 GMT]


 

Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 19:58
Member (2005)
English to Spanish
+ ...
Yes! Jan 1, 2017

Isa Harrington wrote:
Sorry to veer off country-wise but I see a few of you are residing in Spain. Would you say paying the maximum social security contribution of 500-600 euros a month is worthwhile even before you are 48 or just better to go for a private pension plan? Or are both a good bet? Many thanks!

About 40 years ago all friends told my father that by the time he would retire, there would be no Seguridad Social, but as it happens, he is 80 now and has his pension. He paid for the maximum back then, and now both my father and my mother (who no longer live together) live a reasonable life on one Seguridad Social pension.

I have been paying the maximum for three years, and pay some 650 euros every month. If I did not pay that much, I would be forced to pay it into the private pension plan, since otherwise Hacienda would take it "for nothing" in the form of income taxes. At least if you pay it into the Seguridad Social, you improve your rights in the long run, and it definitely lowes your income tax rate. If you think that your rights in case of permanent disability are also calculated on this monthly payment, I think it pays to switch to the higher amount.

If you have some spare money at the end of the year, it also pays to pay it into a private pension plan. Maybe you will not be able to live on it when you retire, but my idea of it is that, if it pays my monthly expenses, like electricity, phone/Internet, heating, and IBI (property tax), I will be happy. When you retire, you can either receive it as a monthly payment, or get it in one go. In the second case, you pay income tax on the whole sum, so Hacienda will bite off a big chunk of the amount. It probably pays to receive it as a monthly payment.

I hope this helps!


 

Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 19:58
Member (2005)
English to Spanish
+ ...
So sad! Jan 1, 2017

Christine Andersen wrote:
Yesterday I visited a couple of old and once very good friends who live on their pensions, and I feel so sad every time. Mostly because they do not really want to solve their problems, so they are very difficult to help, but they both have poor health. You 'don't need to leave the house' - just wait until you can't!!!

So sad! I think this is the less desirable situation, but it also depends in your mind, really. I am about 17 years away from retirement, but my plan is definitely to leave our current home in 7-10 years time. This is a dettached house in a little town requiring permanent use of two cars for almost everything. My idea is to move to a low-maintenance home which is ample enough for us but has public transportation available, more entertainment/learning/sport options not needing the car, and public transportation to universities for my children. This will mean downsizing and probably give up our garden, but I am ready to make the change if this helps me get out more and enjoy free time in different ways. Ideally, also shopping should be possible without the use of a car.

I daresay planning for retirement requires some deep thinking, not only in terms of money, but also in terms of how to take the best care of yourself with a lower cost.


 

Samuel Murray  Identity Verified
Netherlands
Local time: 19:58
Member (2006)
English to Afrikaans
+ ...
Yes, this thread prompted me to look into this as well Jan 1, 2017

Tomás Cano Binder, CT wrote:
I have been paying the maximum for three years, and pay some 650 euros every month. If I did not pay that much, I would be forced to pay it into the private pension plan, since otherwise Hacienda would take it "for nothing" in the form of income taxes. At least if you pay it into the Seguridad Social, you improve your rights in the long run, and it definitely lowes your income tax rate. If you think that your rights in case of permanent disability are also calculated on this monthly payment, I think it pays to switch to the higher amount.


I think this just goes to show how differently different countries deal with this, and what the different options are. I know that my situation is not relevant for your situation, but I might as well tell you my situation, for illustrative purposes.

In country of birth, South Africa, there is no common wealth tax, so paying your left-over money into a savings account or into an investment portfolio has no effect on your income tax (only if your savings/investment shows any interest/returns, then you pay tax on that, but not on the savings amount itself). In my country of residence, the Netherlands, there is wealth tax, so if I save my left-over money for a rainy day, I will end up paying tax on it, even if earns 0% growth.

Also, in South Africa, mortgage interest is not tax deductible, and mortgage interest rates are typically quite high, so it makes sense to pay any left-over money into your mortgage. The extra money essentially "earns" interest at the mortgage interest rate. In the Netherlands, mortgage interest is tax deductible, and mortgage interest rates are typically quite low, so the faster you pay off your mortgage, the less your mortgage interest becomes, and the more tax you pay. If I had not known this, I might have made very bad decisions if I had assumed that investments work the same everywhere.

Since I did not live in the Netherlands for the first 25 working years of my life, I'm now 25 years behind on my Dutch state pension contributions (South Africa has no state pension, whatsoever). This means that when I reach the lowest retirement age (which in the Netherlands is "70 years", in my case, i.e. 25 years from now), I will get €500 per month instead of €800.

However, I've learnt that if I top up my contributions by paying an extra €51 000 lump sum within the next 5 years, then I'll get the full state pension of €800. This information allowed me to calculate that the Dutch government sets my life expectancy at 83 years. If I get older than 83 years, then €51 000 is a good investment on my part, because the pension pays until I'm dead. If I die at, say, 77, then I would have spent €25 000 for nothing.

Another tax-smart option for me would be to get a private pension fund (which is called a life annuity in the Netherlands, since only salaried employees qualify for a real "pension fund"), but in the Netherlands, annuities earn very little growth (only about 1.5%). So instead of paying €51 000 to the state, I can pay €230 per month to an annuity, which would allow me to top of my €500 pension by €300 to get €800, for as long as I live. However, due to inflation (assumed 2%), I would end up paying €83 000 instead of €51 000 over the next 25 years. And of course, if I die before I hit 83, then I would have paid money for nothing.

Yet another tax-smart option for me is to pay the €230 per month into a locked savings account. There is no wealth tax on money in the locked account, and if I die, any money that is left over in the account is inherited by my wife/children, but: when the account becomes unlocked when I reach 70, it only pays money for a finite number of years (5, or 10, or 20) until the money runs out, and I can't get all the money at once. Fortunately, I can pay left-over money into a locked account at any time, with no monthly payments, whereas with an annuity, I have to pay a fixed amount per month/quarter/year. Decisions, decisions, decisions...

Or, I could try to invest my left-over money and hope to earn more than about 5%, enough to beat both inflation and wealth tax. But doing that requires discipline... which I tend not to have.


[Edited at 2017-01-01 13:55 GMT]


 

Markus Nystrom  Identity Verified
United States
Local time: 12:58
Swedish to English
+ ...
Sectoral investments Jan 1, 2017

I don't think any of the public pension systems in the civilized world can be counted on to pay what they have promised. Our women simply are not reproducing enough to keep the systems funded with young workers. Therefore it falls to the individual to squirrel away funds against the day when he will no longer be able to earn a wage through productive labor. The key is to harness those funds to an investment vehicle that will go the distance, so to speak. Without giving specific recommendations, ... See more
I don't think any of the public pension systems in the civilized world can be counted on to pay what they have promised. Our women simply are not reproducing enough to keep the systems funded with young workers. Therefore it falls to the individual to squirrel away funds against the day when he will no longer be able to earn a wage through productive labor. The key is to harness those funds to an investment vehicle that will go the distance, so to speak. Without giving specific recommendations, I would note that the best-performing sectors of the stock market over the past century or so have been Oil, Consumer Staples and Healthcare. For example, one might think of acquiring shares in an integrated oil major like Chevron, in a titan of the staples sector like Nestle, and in a healthcare stalwart like Nestle. All are dividend-paying. If you acquire these holdings incrementally with the fruits of your labor and hold them in a tax-advantaged portfolio until old age well and truly sets in, more than likely they will be providing for you and your family until the end, and growing their dividend payouts to boot. This is not specific investment advice, but is merely offered in the way of a general outline of a sensible retirement strategy.Collapse


 

Kevin Fulton  Identity Verified
United States
Local time: 13:58
German to English
I've never met a retired translator Jan 1, 2017

My mentor worked right until he went into hospice – at age 84. Over the years several older colleagues have been found dead at their keyboards. My government Social Security pension pays a laughable $1300/month. There's no way I could afford to retire.

 

Helena Chavarria  Identity Verified
Spain
Local time: 19:58
Member (2011)
Spanish to English
+ ...
I have a private pension scheme Jan 1, 2017

Isa Harrington wrote:

Sorry to veer off country-wise but I see a few of you are residing in Spain. Would you say paying the maximum social security contribution of 500-600 euros a month is worthwhile even before you are 48 or just better to go for a private pension plan? Or are both a good bet? Many thanks!

[Edited at 2016-12-30 18:29 GMT]


I finished paying off my mortgage in 2015 and I thought it would be a good idea to talk to my tax advisor about my retirement pension. He told me that it would be a good idea to increase my national Social Security contributions but I'm afraid I haven't followed his advice.

Instead I decided to increase the payments of my private pension scheme, which I had started about 20 years previously, though I think I started paying about €50 a month (at the time life was very expensive: my two daughters were young teenagers and I was paying the mortgage). If I live to a ripe old age, I'll be able to use the money to 'top up' my state pension which at the moment would only be 700-and-something euros. On the other hand, if I don't live as long as I hope, my daughters will receive any money that's left in my private pension scheme.


 

Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 19:58
Member (2005)
English to Spanish
+ ...
Still a good idea Jan 1, 2017

Helena Chavarria wrote:
I finished paying off my mortgage in 2015 and I thought it would be a good idea to talk to my tax advisor about my retirement pension. He told me that it would be a good idea to increase my national Social Security contributions but I'm afraid I haven't followed his advice.

Yes, paying off the mortgage is always a good decision and, if it was your first and main home, taking care of the mortgage had its advantages in Spain.

As for the Social Security contributions, depending on your age it might make sense to check again about the maximum you can contribute towards, as it goes down as you get closer to the age of retirement. Depending on what amount you can still aim to, the contribution could be lower and it might make sense. Also, since you can only ask for the change to another contribution level at a certain moment in the year, it might be good to ask your asesor when the change can be requested.


 

Kay Denney  Identity Verified
France
Local time: 19:58
Member (2018)
French to English
How do you know you've never met a retired translator? Jan 2, 2017

Kevin Fulton wrote:

My mentor worked right until he went into hospice – at age 84. Over the years several older colleagues have been found dead at their keyboards. My government Social Security pension pays a laughable $1300/month. There's no way I could afford to retire.



You can work until you die, unless you can't.
Who's paying for your mentor's hospice fees?
You say you can't ever afford to retire, but you can't bank on being able to work until you die, there are plenty of debilitating conditions that could prevent you from translating.
$1,300/month doesn't sound "laughable" to me. The equivalent in euros would be plenty to live on here now we've finished paying for our house.

My partner has invested in property and a fair bit is in both our names. For the moment the rent covers the mortgage payments, hopefully we'll have finished paying those before we're too old and decrepit to earn our living.


 

Michael Wetzel  Identity Verified
Germany
Local time: 19:58
German to English
the case in Germany Jan 2, 2017

David Wright wrote:

Actually I'm surprised you can avoid making pension contributions. Here in Austria at least anyone (with possibly a few exceptions) in gainful employment (and that includes self-employed) must make earnings-related, tax-deductible contributions to a pension fund. At the age of 65 was able to retire on a reasonably comfortable pension topped up by any free-lance work I feel like doing (taxed rather heavily, unfortunately). I would go so far to say that a country that allows you to earn a living wihtout making any contributions to a pension fund so that at the age of 65 you have no choice but to work until you drop is beyond the pale in terms of providing a decent life for its citizens. I find it dificult to believe that this is in fact the case in a country that is (still) a member of the EU.


This is actually more or less the case for the vast majority of self-employed people in Germany. They are not required to save for their retirement in any way.
They are eligible for welfare support if they become impoverished, so they won't be forced to work until they drop. However, I think a lot of people don't realize how little support that is and that it can't be effectively supplemented (I think something like 80% of any additional income is deducted from this aid, because the program is there to prevent poverty and not to further subvention freeloaders who had unrealistic hopes or simply didn't feel like saving for retirement).
It seems like a ridiculous situation to me, but there was a giant outcry several years ago when an attempt was made to do something about it. On the other hand, the self-employed do have it fairly tough with the state pension, because they have to pay both halves of the ca. 19% of net earnings that are supposed to be paid in each year. That also makes it a much less lucrative investment.

PS: While I have no intention to stop working for pleasure when I reach retirement age, I certainly look forward to the day when I will no longer have to work for money. I even hope I won't have to wait until 67 to do so (or whatever inflated retirement age they've introduced by the time I get there).


 

Sheila Wilson  Identity Verified
Spain
Local time: 18:58
Member (2007)
English
+ ...
$1300/month is laughable? Jan 2, 2017

Texte Style wrote:
Kevin Fulton wrote:
My government Social Security pension pays a laughable $1300/month. There's no way I could afford to retire.

$1,300/month doesn't sound "laughable" to me. The equivalent in euros would be plenty to live on here now we've finished paying for our house.

I didn't have time to respond to this earlier. The full UK state pension is worth a little less than half that, but plenty of people manage to get by on it. Sure, the UK pension is really borderline, but as Texte Style says you should have paid off all your mortgage(s) etc by then and hopefully have various income streams. I don't know what exactly the rental income from our second house covers, as we have no mortgage left, but it certainly makes things easier. I also know that I can easily downsize if things get really gritty. One thing I'm not planning on doing is specifically leaving anything other than items of sentimental value to my kids. They're both doing OK and will no doubt manage without any inheritance in the future. There will be a house to sell, I expect, but maybe little else if I get my way.


 

Kevin Fulton  Identity Verified
United States
Local time: 13:58
German to English
Different national retirement assumptions Jan 2, 2017

Texte Style wrote:
[snip]

$1,300/month doesn't sound "laughable" to me. The equivalent in euros would be plenty to live on here now we've finished paying for our house.

I don't disagree with you.
As long as I continue to work, my Social Security pension will be taxed, as will much of any other pension income in addition to earned income. Further, even as a Social Security benefit recipient, I have to pay part of my medical insurance, even if I stop working altogether. Thus $1300 doesn't go very far for a retiree in the US.
At the risk of triggering an unnecessary political discussion, I believe that the "safety net" in the EU is much more comprehensive than in the US, and with the coming regime, our safety net is likely to shrink substantially.


 

Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 19:58
Member (2005)
English to Spanish
+ ...
Perfect approach Jan 3, 2017

Sheila Wilson wrote:
One thing I'm not planning on doing is specifically leaving anything other than items of sentimental value to my kids. They're both doing OK and will no doubt manage without any inheritance in the future. There will be a house to sell, I expect, but maybe little else if I get my way.

I entirely agree. This will mean converting second property to cash so that our children do not need to help us when we are old.


Angie Garbarino
 
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