For many people, retirement seems like a long way off so they tend to put it to the back of their minds.
You’re probably not planning on reducing your standard of living when you retire, but have you thought about how you’re going to pay for it when you’re no longer working? Developments in relation to pensions in recent times make it clear that the responsibility for funding your retirement ultimately lies with you.
The good news is that the Government has put a range of incentives in place giving you even more reasons to save into your pension plan.
REASON NUMBER 1
You may need an income for up to 30 years or more after you retire
People are living longer which means you may be retired for up to a third of your life. That’s why it’s so important to have a savings plan that ensures that the money you earn during your working life lasts your whole life.
Your pension plan is one of the most important savings plans you will ever save into. It can provide you with an ongoing income to ensure you have the money you need to enjoy your retirement years.
REASON NUMBER 2
Your income could drop by over 70% in retirement
When you retire, you’ll probably assume that you will have the same standard of living. However, unless you put a pension plan in place, your income could drop by over 70% in retirement.
The State Pension (Contributory) is currently €12,131 a year (€233.30 a week), but the average salary in Ireland is €45,075*. You need to start saving for your retirement to help avoid a big drop in income, and the impact this would have on your lifestyle.
* Source: CSO, Average annual earnings for full-time employees in 2015, Earning and Labour Costs 2015.
REASON NUMBER 3
If you qualify for the State Pension, you could be 68 before you receive it
The age of eligibility for the State Pension (Contributory) has changed and no longer starts at age 65.
If you were born on or after 1 January 1961 the minimum qualifying State Pension age will be 68. That’s potentially a three year gap in retirement income.
It is important to start planning for tomorrow, today.