The last couple of months BH and I have been focused on paying off our CC, with a goal of having it paid off by March. However just as that goal was within arms reach something came up. My BH's pension plan for his new job (new since August last year) has finally kicked in. This means that we need to back pay the monthly contributions for the last 7 months. As our pension savings are not very good for our age, we decided to pay the maximum voluntary contributions to play catch-up. This means we expect to pay a total of 1400 EUR this month to his pension. This is much more than we can afford to miss from his salary if we stick to the plan of paying off the CC by the end of March.

We have weighed out the budget and if we use the money we have stashed away in savings to pay off the CC to help pay the bills this month, we will be able to make it through to the next pay check. Hopefully we will also be able to keep our 1000 EUR emergency fund intact. The long term benefits of having that additional amount in his pension savings far out way the additional interest that we will have to pay on the CC ( about 20 Euros for the additional month).

Combined with his employer's contribution, that means his pension plan should receive a 2100 EUR boost in March. This will also mean that we would have already contributed a combined total of 2314 EUR to our pensions already in 2008. This will leave only 2486 EUR short of the goal for 2008.

This leads me to 2 questions that I have been trying to answer lately. The first is that due to my BH and mine's situation, should we save for our retirements based on the Dutch pension system or on the American pension system? This question is relevant for us as we both intend to move to the US to live eventually and because we will not be entitled to all the same benefits as Dutch people if we retire in the US. This question came up as I only realized we would not receive the same benefits recently.

As the Dutch pension’s savings schemes are calculated based on the Dutch retirement benefits model, much less personal savings are required for retirement income. However, if we do not receive the benefits, then we need to have saved ALOT more by now than we have actually saved for retirement (mini-freak out session). So I am currently adjusting my thinking to start saving as recommended by an American based retirement model.

Then the second question that has come up is whether I should be putting the additional retirement savings into a pension savings plan, or whether it would be better to save the money in a different way? I could open a trading account and have my bank invest the money saved up for retirement for us. I guess what might help us make the decision of whether we should be contributing more to the current employer pension plan or invest on our own would be what benefits the employer pension plan offers.

The plan is set up so that both the employee and the employer contributes a mandatory amount, then the employee is entitled to voluntarily contribute more up to a certain percentage of your gross salary. I am not sure yet if there is any tax relief on the voluntary contributions. I need to find this out as if there is tax relief, then the choice is already made for us. Considering we are currently taxed 38% of our earnings. However, if there is no tax relief, I ask myself whether it would be better to spread the risk and invest more of the voluntary contributions in a separate investing account with my bank.

As you can see I do not have the second question worked out yet, I still am lacking enough information to make an informed decision.