Pensions are such an important part of a solid financial plan. Planning for your retirement is often overlooked and put on the long finger which is one of the biggest mistakes people make with their finances. It is never too early or too late to take control of your pension. Here are some key reasons as to why you should have a pension, regardless of your age!
Pensions are one of the most tax-efficient ways to save money. You can get up to 40% tax relief when you contribute to your pension pot. When you invest in a pension fund, your money will grow tax-free, and your pension pot can grow as the years go by. If you don’t pay into a pension, you are leaving hard earned money on the table!
Replacing Your Income
The goal of a pension is to replace your income when you reach retirement. A good retirement income is typically two-thirds of your working income. Many people rely on the state pension, which is inadequate for a lot of people. A recent survey showed that Irish workers wildly underestimate what they need to save for a modest retirement income! Over 40% of respondents thought that you would need a private pension pot of €100,000 to receive just a €200 per week income in retirement, while 15% believed that you would only need €50,000. In reality, you would need a pension pot of around €300,000 (Royal London, 2020).
Lots of people plan on living a luxurious lifestyle in retirement and want to tick off the rest of their travel bucket list. If you are one of these people, make sure you know how much savings are required to live the retirement you desire. It can take decades to earn enough savings to reach a good retirement income, so putting it on the long finger can cost you thousands!
When you pay into a company pension, your employer may offer to match it. If they do, take it as it is basically free money! Talk to your employer about your company’s pension scheme but just know that it doesn’t have to stop there. You can make more individual contributions to maximise your pensions benefits. If you don’t think your employer’s pension scheme is sufficient for your goals, talk to us to explore how you can reach your pension savings goal. Remember, paying into a company pension scheme each pay-day is a great start, even if you are in your 20s!
You need savings in your pension pot to retire, not age! Investing in a pension scheme as early as possible will give you a better chance of retiring early. So many people aspire to retire early, but a lot of them don’t have a plan in place and don’t know how much savings are required. If you are one of these people, then you better start saving as soon as possible! On the other hand, early retirement may not be the best course of action for a lot of people. This is because working for longer allows you to save more money into your pension pot giving you a greater retirement income.
What should you do?
There are many great pension schemes on the Irish market, but the first thing you should do is seek expert financial advice. Pensions are not a one size fits all! Your retirement plan needs to be tailored to you and your needs. Everyone’s goals are different. Think about your current expenses and then think about what your retirement expenses might look like. You may also have left pension benefits behind if you have ever switched jobs. Make sure you get all the entitlements that you are owed. So many people are unaware that they have thousands in pension savings left behind. We can help you access all of your entitlements and maximize your pension.
Below are some of our articles on various pension schemes we can assist you with:
If you want to discuss your options, book a complimentary chat with one of our advisors or call 025-30588! We are always happy to help and we will be with you every step of the way!