Once you retire, will you be able to maintain your current standard of living on the state pension of c.€233.30 per week? That is of course assuming the government can afford to continue paying these rates of benefit. With what has become known as the “pension’s time-bomb” the majority of analysts hold the viewpoint that the current rates of state pension benefits are not sustainable.
Either way, you must start saving and plan ahead in order to provide an income for yourself in retirement. It is never too late to start a pension but obviously the earlier you start the easier it should be to achieve your goal and desired level of income at retirement. If you already have a pension, we at Fahey Financial Solutions would advise that you review it on a regular basis in order to ensure that you are on target to reach your desired fund at retirement. As a general rule, for every 5 years you delay investing into your pension, you half the pension fund which you rely on in retirement to provide you with income! So, as you can see delay is expensive. Seriously expensive.
Very simply, pensions are extremely tax efficient long term savings plans for retirement. You can claim tax relief at your marginal rate on the premiums, your savings growth is tax free and you can take a tax free lump sum at retirement.
Types of Pensions and Retirement Structures in Ireland
There are a multitude of different Retirement Planning Structures available, and they include:
- Personal Pension – suitable for self-employed or PAYE workers who are not members of their employers scheme.
- Executive/Company Pension – suitable for directors of limited companies and senior executives. Can also be used by an employer for its employees.
- Additional Voluntary Contributions (AVC’s) – used by members of Executive or Company Scheme as a method of supplementing their benefits in addition main scheme benefits.
- Personal Retirement Savings Account (PRSA) – a more flexible contract which might be more suitable for those who may be changing jobs more often.
- Approved Retirement Fund (ARF) – for retiree’s to draw their pension income from post retirement.
The most appropriate structure depends on a number of factors, including age, income, likely contributions and duration of time you plan on spending in your current role.
If you already have a pension plan you probably know that it is an extremely tax efficient way of saving money for your retirement years.
However, your pension plan needs to be reviewed regularly to make sure you are fully up to date and informed of changes and developments which may affect you.
Some of the things that you need to check regularly regarding your existing or proposed pension structure include:
- Are you invested in funds that still match your attitude to risk?
- Do you know total amount of contributions paid V’s current values?
- Is your existing pension arrangement competitively priced?
- Is your existing arrangement appropriate to your current financial circumstances?
- What is the agreed investment strategy as you approach retirement?
Seeking professional independent advice as early as you can in your working life is the best investment decision you will ever make.
If you would like more information on any aspect of retirement planning we are here to help you.
Contact Us Today
Fahey Financial Solutions provide a range of solutions to cater for all your requirements. To find out more about our service, contact us today on 091-394187, email firstname.lastname@example.org or book an appointment through our Contact Page.