Congratulations! You’ve worked hard all your life, you have spent many years saving, and now your retirement is in sight. In just a few years you can switch off the alarm clock, forget about commuting and start to plan all those exotic holidays you have dreamed about. Whatever your dream in life is you want to make sure that your finances will cover it.
In the 5 years leading up to your retirement it’s important to have yearly reviews with a Financial Broker to ensure your pension plan remains on track to meet your income needs in retirement. It is important to do this while there is still time to make a difference.
Now is the time to ask questions around how best to maximise your fund in the lead up to your retirement, and get advice on how to manage that pot of money once you retire. A Financial Broker will be happy to help you with these and many other questions as you plan your retirement.
As your retirement gets closer, you and your Financial Broker will look at your pension plan and your own plans for your retirement in more detail so that you will be properly informed and prepared to make key decisions.
Your Financial Broker can check if your pension plan is on track to provide the retirement income that you are expecting, and can advise ways in which you can maximise your pension savings before you retire.
You will need to decide how you are going to take your pension savings. A number of options will be available to you and it’s important to understand what these are. Your Financial Broker can explain the pros and cons of each option and help you decide on the best option based on your circumstances.
You will need to review the funds your pension savings are currently invested in to ensure it remains suitable in the years running up to retirement. You might be advised to switch into a different fund and if so can talk you through a range of investment funds for you to consider.
Pensions can seem complicated and people usually have many questions as their retirement gets closer. Here are a few of the most common questions;
Typically, you can access your fund in full at retirement. In general, people can retire between age 60 and 70 but there are exceptions. Your retirement age may depend on the rules of your pension arrangement or on your occupation.
The options available to you depend mainly on the type of pension plan you have and the size of your retirement fund. You can normally take part of your retirement fund as a tax free lump sum, subject to a limit of €200,000. Even if your retirement lump sum is greater than €200,000, the next €300,000 is only taxed at the standard rate (currently 20%). You will then need to decide how to take the remainder of your retirement fund. Do you want a guaranteed income for life or would you prefer to continue investing in your retirement and draw income from that fund?
You should receive detailed information on your actual options before you retire and you should carefully study these. Everybody’s circumstances are different so it is important to discuss your options with your Financial Broker before making a decision.
The option that is right for you will depend on many factors including:
• The size of your retirement fund
• The level of income you and your family will need during your retirement years
• The value of other assets, apart from your retirement fund, you have to fall back on
• Whether security or investment growth is more important to you during your retirement years
• Whether you wish to pass your retirement fund on to your dependants on your death
• Your current state of health.
Putting more money into your pension plan as you close in on retirement can be an effective way to help make up any shortfall that you may have identified in your pension savings, or if you just want to take advantage of the tax benefits on offer. The maximum percentage of your salary that you can normally save into your pension plan each year, and claim tax relief on, increases as you get older. If you are aged 60 or over, this is up to 40% of your salary.
You will no doubt have other questions about pensions which your Financial Advisor will be happy to answer. Ark Finance are an independent Financial Advisor that has many years’ experience working with clients to advise and assist with their investments. Based in Kildare but with an office also in Dublin we would be happy to speak with you now that you are approaching retirement.