Pension – What will you be doing when you are 70?

Pension & retirement planning  What will you be doing when you are 70

It’s important to start a pension

We at Alpha Wealth are believers that we have to be realistic about our expectations.  Of course we would all like to retire at 40,  live on a Tropical Island and drive around in a new Jag.  However most of us realise this not likely unless we win the Lotto.  We realise talking about starting a pension is not the most heart racing topic and you would rather be living your life than worrying about your retirement, but the time clock is ticking.

State Pension

For those of us fortunate to receive the State Pension you are likely to receive about €250 per week. (which doesn’t apply to most self-employed people). You might think this is enough but there is a great strain on funding the State Pension and when you, or I, retire there is going to be less workers per retired people than there is now. (roughly 2 working for every 1 retired).  I am good with numbers but it doesn’t take a mathematician to work out that this is not sustainable. I won’t be booking an around the world trip on the strength on this.  If you will be 65 after 2028, you will have to wait until you are 68 years of age to receive the State Benefit.  There isn’t many people that can afford to live on this amount.

Make pension plans early

The average person in Ireland can expect to live between 20 and 25 years in retirement. This is why it’s hugely important to make plans now.

So where to from here ? 

Whether you have a Pension and just want some advice and guidance or want to look at your options, things are not as bleak as they may seem. A lot of people I speak to have some form of Retirement Pot.  This may be from previous employment that they have either forgotten about or lost track of.  The biggest problem most people have is DELAYING.

Pension – the earlier you start the better

In our opinion this is a mistake.  Someone who waits 10 years to put a modest amount of €50 per week , would have about €5,500 LESS per year. 

Pension – Tax relief

You can get tax relief on your pension contributions. Tax relief for employee pension contributions is subject to two main limits. (1) – An age related earnings percentage limit. (2) – A total earnings limit.

Example

Jake, 42 year old employee earns €40k a year. Jake can get tax relief on annual pension contributions up to €10,000

A lot of people place retirement on the long finger and we understand clients have more pressing priorities such as bills and other expenses.  However, Pensions  should not really be discussed in isolation.  Other assets should be taken into account and we often save people money in others areas that enables to afford to pay into a plan.  We at Alpha Wealth, provide Health & Mortgage Protection Insurance reviews as well as other arrangements to see what “fat” might be cut out.   You can’t run yourself like a business but if you wonder why Aldi and Lidl have been so successful is that they are organised and meticulous in cutting costs where possible and constantly reviewing where they are. Check out our pension calculator to see how much you need to put away to plan for your retirement.

Leave a Reply