Juggling the family finances is a tricky business for all of us. The mortgage has to be paid each month, other loans need to be addressed, insurances must be paid, food must be put on the table, everyone must have clothes etc.… And all of this is before we even start thinking about the nicer things in life such as social outings, holidays and the rest!
Many people see paying money into their own personal pension plan as a lower priority to all of the above. In fact, only about 50% of working people in Ireland are making any provision for their latter years. So who is right – those who are looking after their futures or those who are not?
Any Financial Broker that you speak to will always put retirement planning on the agenda for discussion. Because they know the importance of it, and have seen the (good) consequences for those people that plan adequately and the (bad) consequences for those that don’t. So why do Financial Brokers place such huge importance on pension planning?
We’re all living longer
While this is of course positive, it brings the challenge of needing enough financial resources to see us through many later years. Men in Ireland are now living to age 78 on average and women to age 83. In fact, according to the renowned Cambridge University geneticist Aubrey de Grey, the first person that will live to be 150 years old has already been born – a scary thought! So this person might work for 40 to 50 years and then be retired for about 80 years.
With long term care so expensive for elderly people, having a well resourced pension plan in place is so important to maintaining your independence in old age, and to avoid being a financial burden on your family.
You cannot rely on the State
Many people think they’ll be “all right” as the old age pension will see them through their retired years. The challenge with this thinking is that the old age pension only enables a meagre existence. The current level of old age pension is €230 per week for a single person, a little less than double that if you are married. You aren’t going to have much room for luxuries based on those amounts. And these amounts haven’t changed in years; they are not even tracking inflation. In fact the benefits have effectively reduced in that the state have pushed out the age at which you can start to claim your old age pension – to age 68 if you were born in 1961 or later.
All is not lost…
To encourage people to take responsibility for their own retirement planning, the government have left the attractive tax breaks in place for pensions. So starting your own pension plan is still the most effective way of planning for your latter years. And your Financial Broker will help you to identify the best plan for you.