Poll: What percentage of your current income do you put aside for a private pension?
Thread poster: ProZ.com Staff
ProZ.com Staff
Local time: 06:56
SITE STAFF
Nov 6, 2005

This forum topic is for the discussion of the poll question "What percentage of your current income do you put aside for a private pension?".

This poll was originally submitted by Marco Oberto

View the poll here

A forum topic will appear each time a new poll is run. For more information, see: http://proz.com/topic/33629


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Muriel Vasconcellos  Identity Verified
United States
Local time: 06:56
Member (2003)
Spanish to English
+ ...
This is an important issue! Nov 7, 2005

I have the good fortune to be retired with a pension from a full-time translating job, so for me, my translation income supplements my pension.

That being said, I do save by not spending. I question every purchase and pat myself on the back when I find less expensive ways of doing the same thing or eliminating a discretionary expenditure that I really don't need.

I know what it's like to count pennies in retirement, and I fervently wish I had saved a lot more when I could have. I was a classic case of denial, thinking "Oh, my pension will be more than enough." The future seemed far away until the day it was upon me. I'd be happy to serve as an example of what not to do.


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Ana Cuesta  Identity Verified
Spain
Local time: 15:56
Member
English to Spanish
At the risk of opening a can of worms Nov 7, 2005

I find the results so far very telling. When I hear that translators in certain countries can "afford" to charge less because their costs of living are lower, I've always wonder if they include a private pension scheme into those costs of living. I suspected they did not, which actually seems to be the case. When I hear Spanish colleagues complaining that the minimum, customary contribution to Social Security pension is too high (about 200 euro/month), it gives me the creeps since that "expensive" pension will only but you a retirement pension of about 700 euro/month (please someone correct me if my calculations are wrong, you'll make my day Don't know how it works in other countries, but in Spain the proportion between contribution to pension you pay now/retirement pension you'll get in the future is ABOUT the same for employees and for the self-employed (around 28%), the main difference being that employers "pay" most of it on behalf of the employee (22%) so the employee only sees deducted from her salary a little over 6% while the self-employeed pay the whole sum in the same go (and so is more aware of it When you realise you have to put aside 1/3 of what you consider reasonable earnings towards future pension (be it under Social Security or a private scheme), guess you have a whole different perspective into rates.

Just my opinion, anyway


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Orla Ryan  Identity Verified
Ireland
Local time: 14:56
Scary! Nov 7, 2005

I'm shocked that there is such a high % of people who say they cannot save. At the end of the day, we are businesspeople as well as being translators. You can't go on living from hand to mouth. (taking quiet periods etc into account of course).

I'm very interested in how this poll is going to pan out. I've got a pension from an old job. I am also trying to buy my 1st apartment at the moment, so I've been in consultation with my accountant about my future plans etc.


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tontoon
Turkey
Local time: 17:56
German to Turkish
+ ...
NO WAY! Nov 7, 2005

First of all i apologise for my terrible english. As you can see im translating German-Turkish. In Turkey the most Translators are working for a price of 3-4 Euro for 1 page. So there is no way to save money for this stuff. In Turkey people are happy if they can live from this job. I hope this changes when we are a Part of the European Union.

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Parrot  Identity Verified
Spain
Local time: 15:56
Member (2002)
Spanish to English
+ ...
Touché Nov 7, 2005

Ana Cuesta wrote:

I find the results so far very telling. When I hear that translators in certain countries can "afford" to charge less because their costs of living are lower, I've always wonder if they include a private pension scheme into those costs of living. I suspected they did not, which actually seems to be the case. When I hear Spanish colleagues complaining that the minimum, customary contribution to Social Security pension is too high (about 200 euro/month), it gives me the creeps since that "expensive" pension will only but you a retirement pension of about 700 euro/month (please someone correct me if my calculations are wrong, you'll make my day


Sorry if I can't correct you (700 is just about it), but I can add a word of caution. You can keep doing this until the month before you turn 50, since the last 15 years are what count. By that time, it's to be hoped you're earning enough to be desperately seeking tax shelters, and SS pension is 100% deductible (as opposed to private pension funds, which are deducted 15-18%). So if, around this time, you're already hedging to make sure you don't earn that fatal extra penny that's going to catapult you into undesired upper-income brackets that get the heavy (50%+?) ax, the "savings" are worth thinking about. Even considering you like the profession enough to continue working after you're retired, it would be nice to be able to choose the kind of things you really want to translate at that point.


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Alison Schwitzgebel
France
Local time: 15:56
Member (2002)
German to English
+ ...
What constitutes savings towards a pension? Nov 7, 2005

There are many ways of saving for retirement. Pension plans are just one of them. What about mortgage payments for your own house, life insurance payments, general savings plans, etc. Just some food for thought

Alison


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Ana Cuesta  Identity Verified
Spain
Local time: 15:56
Member
English to Spanish
Not quite answering to you, Ceci, more like adding to your word of caution Nov 7, 2005

Parrot wrote:

Sorry if I can't correct you (700 is just about it), but I can add a word of caution. You can keep doing this until the month before you turn 50, since the last 15 years are what count. By that time, it's to be hoped you're earning enough to be desperately seeking tax shelters, and SS pension is 100% deductible (as opposed to private pension funds, which are deducted 15-18%). So if, around this time, you're already hedging to make sure you don't earn that fatal extra penny that's going to catapult you into undesired upper-income brackets that get the heavy (50%+?) ax, the "savings" are worth thinking about. Even considering you like the profession enough to continue working after you're retired, it would be nice to be able to choose the kind of things you really want to translate at that point.



1) Legislation regarding how many years are counted has changed before (it was the last 9 years until the famous Pacto de Toledo) and is sure to change again, with more and more voices calling for all years to be counted as both a fairiest and a safest practice (so the SS system does not collapse). Personally, just in case, I pay the minimum contribution to the SS but have also a private pension plan (fully deductible, we can discuss that if you want to complement it (which I'll probably stop contributing to when I turn 50 and increase the contribution to SS instead

2) Even if the legislation does not change, if one now settles/accepts a rate based on minimum contribution expenses, what hope can one have to later increase that rate as to being able to aford the hefty extra expense?

So, I really think the savings/pension plan should be factored into the equation (which, again, I have the impresion many compatriotas don't


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Sara Freitas
France
Local time: 15:56
French to English
"Pay yourself first" Nov 7, 2005

This is sort of the golden rule for personal finance. I agree with Orla that it is scary that many of our colleagues say they can't afford to save.

By starting early and starting small, compounding will work its magic and you will be doing yourself a huge favor for the future. But the trick is that you have to start *now* for it to work. Even 25 or 50 dollars a month is better than nothing.

I have always been a good saver, but I have to say that Suze Orman's books made a big impact on me. Start with "The 9 Steps to Financial Freedom". Lots of the concrete tips are based on the U.S. banking model/investment products, but there are many more general life lessons in this book that are invaluable. You can then see your accountant and/or banker to see what your options are where you live.

How we handle money often says a lot about who we are as people (not necessarily who we want to be). Learning to take care of yourself financially can be an empowering experience, so go for it!

Here are a couple of links:

http://www.suzeorman.com/index.cfm (books and other resources)

http://www.choosetosave.org/ (simulators/calculators)

Hope you find these helpful. I know I did several years ago. I was broke after putting myself through college and grad school, but made the decision to take control of my finances, paid off my student loans in 4 years instead of 15, saved quite a bit for retirement (I'm 33) and now own my own home as well as a rental property. 10 years ago I had 30K USD in student loan and credit card debt and not a penny to my name, so if I can do it, anybody can, believe me.

Good luck!

Sara


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Roomy Naqvy  Identity Verified
India
Local time: 20:26
English to Hindi
+ ...
does not exactly apply Nov 7, 2005

I work as an Assistant Professor at a Univ in India and I am a government employee where I would be entitled to pension at the rate of 50% of last salary drawn at the time of retirement. So, I don't need to save for my pension [and this would be family pension, so, my wife would get it on my death]. But yes, I do need to save for building a house etc. So, I am now investing money in long term stocks using a personal systematic investment plan. I plan to put about 30% of my net household income in this plan till I feel I have reached a critical amount, after which I plan to put about 15% or so. Also, I plan to compound the income so that it becomes a corpus and not use it for effecting purchases in the home.

Roomy Naqvy


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Сергей Лузан
Russian Federation
Local time: 17:56
German to Russian
+ ...
Every 3rd/4th job is properly legalized Nov 7, 2005

Every 3rd job is properly legalized, that's the reason the 37 % %centage added converts into 10 - 11%. We in Russia have not too much trust in state. I just keep earned money in banking account as many of my colleagues do AFAIK.

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Daina Jauntirans  Identity Verified
Local time: 08:56
German to English
+ ...
What about health insurance or healthcare costs? Nov 7, 2005

I am not counting on Social Security, although I hope it will be there for me. I also put money into a private fund when I can. The main reason I can't save as much as I'd like in the US is our family's health insurance premium and healthcare costs (and we're generally healthy!). Some months a whole fifth or more of my month's income goes toward these costs. This could put a real crimp in our retirement planning or our retirement itself - I don't see how I can save enough to cover old age/illness on top of just living expenses.

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Muriel Vasconcellos  Identity Verified
United States
Local time: 06:56
Member (2003)
Spanish to English
+ ...
Another good financial planning reference for free lances Nov 7, 2005

Let me also recommend Phil Laut's "Money is My Friend." I read his book twice and had weekly telephone coaching with Phil for a year. He really changed the way I do business. He is a great inspiration for independent entrepreneurs. http://www.phillaut.com/

(I just noticed that Phil is using my testimonial on his website. There is no profit in that for me, and I haven't talked to him in years--I don't need to any more. It's true that my income quintupled under his coaching, but now I'm more deeply into retirement and have reached the stage where enjoyment is more important than volume. I pick the jobs I want to work on.)


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Sara Freitas
France
Local time: 15:56
French to English
Knowledgebase article on saving for retirement now online Dec 21, 2005

http://www.proz.com/doc/567

Several similar threads sparked me to post an article about this very important issue.

Sara


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