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Countdown to Retirement: Financial Preparations for Every Stage

As you approach the later stages of your career, retirement planning becomes more important than ever. Whether you work in the private sector, are self-employed, or are a contractor, navigating retirement requires careful consideration of pension options, tax implications, and healthcare provisions. In this post, we review the countdown to retirement from 10 years out to the big day.

10 Years to Retirement

Assess Your Pension: Review your current pension provisions, whether through a workplace pension scheme, personal pension, or the State Pension (Contributory). Evaluate your projected pension income and consider whether you need additional savings for the lifestyle you want in retirement.

Understand Tax Relief: Take advantage of tax relief on pension contributions by maximising your annual contributions within Revenue limits. Explore AVCs (Additional Voluntary Contributions) to boost your retirement savings.

Diversify Investments: Work with a financial advisor to diversify your pension investments, considering a mix of equities, bonds, and alternative assets to optimise returns in alignment with your appetite for risk.

Pay Off Debts: Prioritise paying off high-interest debts to enter retirement with a clean financial slate. Consider strategies to accelerate debt repayment while maintaining your pension contributions.

Plan for Healthcare: Research healthcare options in retirement, including private health insurance and supplementary health plans. Understand the role of the Medical Card and other entitlements for retirees to ensure you will have the cover you need.

5 Years to Retirement

Review State Pension Eligibility: Check your eligibility for the State Pension (Contributory) and assess your PRSI (Pay Related Social Insurance) contributions to maximise your entitlements. Consider voluntary contributions if you need to fill gaps in your record.

Explore Pension Options: Investigate annuity rates, Approved Retirement Funds (ARFs), and Approved Minimum Retirement Funds (AMRFs) as potential vehicles for pension drawdown. Understand the implications of each option for income sustainability and tax efficiency.

Adjust Investment Strategy: Gradually transition to a more conservative investment strategy as retirement approaches, prioritising capital preservation and income generation over growth.

Consider Long-Term Care: Evaluate long-term care options, such as the cost of nursing home care and other healthcare services.

Fine-Tune Retirement Budget: Refine your retirement budget based on updated expense estimates, incorporating factors like inflation, healthcare costs, and potential travel or leisure activities.

2 Years to Retirement

Plan Exit Strategy: Discuss your retirement plans with your employer and arrange a suitable exit strategy, whether it involves phased retirement, early retirement, or a traditional retirement date.

Seek Pension Advice: Consult your financial planner to review your retirement income projections, assess any shortfalls, and explore strategies to optimise your pension benefits.

Investigate Tax Implications: Understand the tax implications of pension withdrawals, lump sum payments, and other retirement income sources. Consider timing your withdrawals strategically to minimise tax liabilities.

Explore Downsizing: Evaluate your housing options and consider downsizing to a more manageable property that aligns with your retirement lifestyle and financial goals.

Update Legal Documents: Review and update your will, enduring power of attorney, and other legal documents to reflect your current wishes and ensure a smooth transition of assets to beneficiaries.

1 Year to Retirement

Finalise Your Retirement Date: Confirm your retirement date with your employer and complete any necessary paperwork or formalities required for your pension and benefits.

Plan Pension Drawdown Strategy: Develop a structured pension drawdown strategy that balances income needs with tax efficiency and longevity risk. Talk to your financial advisor for personalised advice for your specific situation.

Pay Off Outstanding Debts: Clear any remaining debts or outstanding loans before retirement to minimise financial obligations and reduce stress in your golden years.

Establish Emergency Fund: Set aside a dedicated emergency fund to cover unexpected expenses or financial emergencies during retirement, providing peace of mind and economic security.

6 Months to Retirement

Complete Pension Paperwork: Submit any final paperwork required for pension commencement, including pension drawdown forms, tax declarations, and beneficiary nominations.

Organise Financial Documents: Gather necessary financial documents, including pension statements, insurance policies, wills, and legal documents, in a secure location for easy access during retirement.

Plan Retirement Celebration: Celebrate your achievements and milestones with friends, family, and colleagues as you embark on this new chapter of your life.

Prepare Mentally and Emotionally: Take time to mentally and emotionally prepare for retirement, envisioning your future lifestyle and adjusting to the transition from work to leisure.

Embrace Retirement with Confidence: Approach retirement with confidence and optimism, knowing that you’ve taken proactive steps to enjoy the lifestyle you want in retirement.

Final words…

Retirement planning should be exciting and give you control over your future and how you want to spend your time. Ten years from retirement, you can thoroughly assess whether you’re on track to achieve your goals and, if not, what you need to do next. While preparing for retirement may seem daunting given the serious decisions that need to be made, and the amount of paperwork that needs to be completed, a trusted financial advisor like those in our team at Hennelly Finance can relieve you of your stress by providing you with step-by-step guidance throughout the process. We believe in empowering our clients to take control of their future by providing clarity around their options and helping them make informed decisions with confidence. If you are on the countdown to retirement, give our team a call for a complimentary chat about your situation on 091 670 123.




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Barna, Co. Galway.
H91 AF1W

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