Looking to the future and our retirement, many of us consider retirement age to be 55 or 60. More often than not, that is not the case and we must work until we are 68. Organising your finances and planning for your future is crucial.
The State Transition Pension was abolished in January 2014, thereby increasing the pension age to 66. The state pension age is due to increase further to age 67 in 2021 and 68 in 2028.
As we are living longer and the pension age keeps increasing, planning for your retirement or making sure your pension is on the right track should be a priority.
According to the CSO, 68% of workers expect to retire aged between 60 and 69 years, while one in twelve (8%) have no intention of ever retiring. The number of workers who expect the State pension to be their main source of income has risen from 26% in 2009 to 36% in 2015.
Consider retirement age
So at what age can you afford to retire? And how much will you need?
Most people hope to relax and enjoy their retirement. It’s when they will finally get the time to do the things they most enjoy in life. But how do you ensure you have the necessary income to do so.
The State pension is now €230.30 per week. For most people that is not enough.
Although it is 20 years old, the National Pension Policy Initiative of 1998 is still a good guide. It suggested an “adequate” gross retirement income of 50 per cent of gross pre-retirement income.
Breakdown your earnings
So if you earn €80,000 on the day you retire, you need a pension income of €40,000. If €12,000 a year comes from the State, you need €28,000. To reach that magic number, you will need a fund of between €700,000 and €930,000.
It goes without saying; the earlier you start saving the easier it is to build a substantial pension pot. If you’re older, there are ways and means to build your nest egg.
We can advise on the tax breaks available, type of company scheme you can join, how much AVC’s you should make… but the first step is to estimate what your monthly pension savings should be in order to help secure the future you want.
Financial planning advice
Talk to SYS Wealth & Financial Planners today and we will help you calculate what savings you need to make to provide you with a reasonable living standard when you hit retirement age.
This blog was brought to you by SYS Wealth & Financial Planners who are expert Financial Planners with particular expertise in pensions, life protection, retirement and inheritance planning, savings & investments and strategic wealth management.