Age 50+

How’s your pension doing?

Not sure?  Then how will you know what your retirement’s going to look like?

Keep your future on track with regular pension reviews.

How much do I need to invest?

How much do I need to invest?

The simple answer is ‘as much as possible as soon as possible’.  The tax man will help you along the way with generous tax relief on your pension contribution.  The simple rule of thumb is to invest an amount equal to half your age.  Yes, half your age.  So if you are 50, then your contribution rate should be over 25% of earnings.

You can get tax relief on these contributions, as follows:

Age

50 – 54     – 30%

55-  59     –  35%

Because pensions are designed specifically for retirement, they offer a number of advantages that other savings plans don’t.

  • The money you pay in benefits from tax relief.
  • You can’t access your savings until at least age 50, so no temptation to dip into them early.
    Your money grows in a tax efficient way as no capital gains tax applied to growth.

We’ve based these details on our understanding of current taxation law and practice. They might be affected by any future changes in legislation.

When will you be eligible for the State Pension?


The State Pension age is increasing to:

  • age 67 in 2021
  • age 68 in 2028

If you want to retire earlier than 67/68 years, you may be able to do this if you have a sufficient private retirement fund in place.

Checklist to keep on track.

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  • Collate  your Benefit Statements for your personal, company, PRSA and AVC  pensions.
  • Write to previous employers to track retained benefits.
  • Check the performance of your pension investments.
  • Is the asset allocation consistent with your term to expected retirement.
  • Switch out of  underperforming investments.
  • Ensure your investments suit your appetite for risk.
  • If you plan to take an annuity, consider a lifestyling option, which will reduce the risk in your pension funds as you get closer to retirement
  • Gauge what your living costs might be when  you retire.
  • Compare your pension forecasts to how much your living costs will be in retirement.
  • Consider consolidating your pensions to make it easier to manage your retirement savings. Before consolidating, check you’re not forfeiting any benefits or incurring any charges
  • Write to the Department of Social & Family Protection to establish your entitlement to the state pension.
  • If you can, increase your pension contributions to take advantage of the additional tax relief.
  • Check whether your employer will match your company pension contributions if you increase them.
  • Consider making additional lump sum contributions to your pension if you receive a bonus.

When you have all the information, you can then calculate your expected retirement fund.   A calculator is available at www.pensionsboard.ie .  This will give you a realistic expectation of the percentage of your current income you will have in retirement.  You still have over 15 years to plan, so you have lots of time to increase the monthly investment amount to ensure you have adequate income in retirement.

What amount of investment risk are you willing to take?

You could invest in a Lifestyle Funds, this type of fund aims to change your asset allocation as you approach retirement.  Each fund manager may however have a different approach to the de-risking process and asset allocation.  Some will move to Gilts and Cash whilst others may use Alternative Asset Classes to help reduce risk and volatility.  Check your funds to ensure you are de-risking as you approach retirement.

For Clear Impartial Advice on Retirement Planning: Contact Future: