Approaching Your Retirement

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What do I do when approaching retirement?

Approaching retirement is a time when many people look forward to enjoying the fruits of their hard work over the years. And if you are set for the retirement you are desiring, then it really is an enjoyable time of your life.

For others though, there are still some aspects of retirement to consider as they approach that time in their lives. For better advice, we need to answer the main questions, such as:

Ask yourself some questions:

  • How much do I need?
  • How much do I have?
  • Is it enough?
  • How much would I like?

See our easy to use pension calculator here or talk to one of our Advisors.

Our Expert Advisors are here to advise you on the best path to help you reach your retirement goals.

Boosting retirement savings

When approaching retirement, it is recommended to consider whether or not you have saved enough money to fund the lifestyle you would like once you retire. If you’re approaching retirement age and you feel your retirement fund may not be as large as you wish, there are some things you could do.

One of the main ways to boost your retirement fund is to make an Additional Voluntary Contribution (AVC) to your pension which could help increase your fund amount in a tax-efficient way. If you’re unsure about whether your retirement savings are sufficient for the lifestyle you have planned, speak to one of our Pensions specialists.

When can I retire?

As they approach retirement age in Ireland (currently 66 if you are planning to draw a state pension but likely to change over the next few years), many people decide to delay their retirement or even decide to work part-time after they retire.

The terms of your employment contract may dictate when you must retire, so you should consult this first before you make any decisions. If you decide to continue working after you retire you can still collect your pension, or you may also be able to defer your pension for many years.

So, deciding to retire or continue is an important consideration when planning your retirement. The age at which you retire will determine how much money you need to save and the amount of time you will have to build up your retirement fund.

For advice about when you could retire or whether your fund is sufficient, contact one of our team.

Accessing your retirement fund once you’ve retired

Choosing how and when you would like to receive your retirement income is an important decision and it makes sense to have all the information and advice to hand to guide you through the process.

Before deciding how you would like to receive your pension income, there are a few things to consider – the type of option you choose may depend on your pre-retirement policy conditions.

It will also depend on how much you have saved in your retirement fund, the type of pension you have, and your  personal preferences whether it be an ARF or an Annuity.

Future peace of mind

One of the main worries people often have is how a change in circumstances could impact their retirement fund:

  • What will happen to my partner should I die?
  • If I die before my retirement, will my pension fund be paid to my partner or my estate (subject to the rules of the scheme).

There are many aspects to consider and there is no definitive answer to questions such as those above – it may be that your fund is paid free of income tax, although your estate may have to pay inheritance tax. Or, If you die after you retire, and you have a pension, it may continue to be paid to your partner, be paid to your partner as a lump sum or be paid to your partner as a percentage of your pension payments.

Given the potential complexity of this area, it’s a good idea to seek financial advice so you are clear about all possible outcomes.

For questions on any of the above or any other pension-related concerns, you may have, contact one of our pensions experts on 1890 300 303.

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Important Assumptions

For the purpose of determining the term over which pension contributions are made, we have assumed your birthday was exactly six months ago.

If your target retirement age is lower than the age at which the Social Welfare pension commences (age 68 if you are born on/after 01/01/1961, age 67 if born before this date but on/after 01/01/1955 and age 66 if born before 01/01/1955) the calculations allow for funding for this gap, in addition to the cost of the annuity.

You are entitled to a full Social Welfare pension of €248.30 per week as at March 2019 which is assumed to increase by 2.5% per year.

You are saving for the difference between the Social Welfare pension and your target monthly income in retirement.

We have allowed for inflation of your target monthly income of 2.5% per annum between now and your retirement date.

Any other private pension provision you may have in place has not been taken into account.

Your monthly pension contribution increases by 2.5% each year up until your retirement age and is invested in a pension plan with an annual management charge of 1% and a 5% charge on each contribution, in line with the Standard PRSA fees and charges maximum limit.

A Gross Investment Return of 4.2% per annum on your savings. This is not a forecast because the value of your investment may grow at a faster or slower rate than assumed and the value of your investment may be expected to fall from time to time as well as rise.

On retirement you purchase an annuity which escalates at 1.5% each year, has a 5-year guarantee and is payable monthly in advance. The annuity rate assumes a post retirement interest rate of 2% per annum and no spouse’s pension. The actual annuity rate will depend on the selection of dependant’s pension, guaranteed period and the escalation rate, as well as interest rates prevailing when the annuity is purchased.

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