Trawling through the internet for information about starting an Irish pension plan may leave some people rather deflated. These people are the ones who have left their retirement plans until rather late in life, their 50’s and 60’s. It is commonly known that it is best to start a pension plan as early as possible, but that does not mean that there is not plenty of possibility for the older person to save enough to be comfortable during retirement. It is never too late to begin a pension plan.
Whilst it is fact that the most comprehensive pensions are those that are in place the longest, unfortunately for some, life’s challenges come along and destroy even the best laid plans and people may end up having to start from scratch. For example, a person planning to retire from a property income may then find that the property market collapses, and they would be one such person who has only a few years to make up for lost ground. And because of the unpredictable nature of such events people may discover that they are only a few years from retirement with less capital to fall back on than they had presumed.
There is definitely hope for these people, so if you happen to be one of them, do not despair. With a well formulated and executed plan it is more than possible to save yourself from an old-age of destitution. You may not experience all the things you had previously planned for your retirement, but you will be able to live comfortably. Making good decisions now will help you later.
The first aspect that should be considered is the construction of a comprehensive written budget. This involves estimating your future retirement needs, in terms of your financial out-goings, such as rent, utility bills, food, etc. Once you have outlined your financial needs you will have a rough estimate of the amount of income you will need to live-off. After the budget has been written you must draw up a breakdown of all the financial assets and debts that you currently have and work out what your net worth is. Once you have this you will have a sound estimation of your current financial situation in relation to your retirement, and how much more capital you need to accumulate before that day comes.
If you have found that there is a massive difference between what you have and what you need and that you are fast approaching the age of retirement, it is of the utmost importance to start saving as much as possible from as many sources as you can. If you do not have one, then you should set up a pension plan. Pension plans offer great benefits, when you pay money into your pension plan, you can receive tax relief benefits. For instance, if you pay income tax at 41%, the tax man will rebate you €410 for every €1,000 that you pay into your pension fund. This means that the cost of providing your pension fund is subsidised by the tax man, also the tax man does not charge tax on any growth earned by your pension fund. This means that your pension fund growth will be higher over the long term as all the growth made is re-invested.
If, however, you do not have any extra money you can lay your hands on, then you will have to start making changes to the way in which you live, move to a smaller property, start buying less expensive products, spend out less on luxuries or maybe even start a second job, or at least apply for a better paid one. Make any changes that will mean that you have more money to save, the more you manage to accumulate the better will be your retirement potential.
There is another strategy that you can employ if you find yourself struggling with regards to providing for your pension, and that is to defer the age at which you retire, for every additional year in employment an additional sum will be added to your pension fund, plus you will not be removing any funds from it so it will continue to grow too.
Finally, try not to worry too much, these problems can be overcome and a comfortable retirement is definitely possible. Even if you only manage to save for 5 years, this will still boast your income a little, and remember that you could be eligible for the state income also; this will certainly help you in your later years, although it should not be used as your sole source of income.
This article is based on the authors own observations and research and is not associated with any 3rd party organisations.
