AL­MOST RE­TIRED?

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

Should you only have a year or two to go un­til re­tire­ment, there is very lit­tle you can do to undo the con­se­quences of de­ci­sions you have made over your work­ing life. Ul­ti­mately, most of the money in your pen­sion pot will have been built up over your work­ing life — how­ever, top­ping up your pen­sion con­tri­bu­tions in the fi­nal years lead­ing up to your re­tire­ment can boost your pen­sion pot. In the years lead­ing up to your re­tire­ment, get in­de­pen­dent fi­nan­cial ad­vice on how to boost your tax-free pen­sion lump sum. Sav­ing ex­tra money into your pen­sion through Ad­di­tional Vol­un­tary Con­tri­bu­tions (AVCS) could en­hance your tax-free pen­sion lump sum — though this will de­pend on your cir­cum­stances.

For those who don’t have an ad­e­quate pen­sion by the time they re­tire, down­siz­ing to a smaller prop­erty could be their only way to raise the money they need for re­tire­ment.

Un­der­stand ex­actly what you’re get­ting into though. It can be very stress­ful to move house in your el­der years — house moves require a lot of en­ergy and or­gan­i­sa­tion. Should you be se­ri­ous about down­siz­ing, do so be­fore or shortly af­ter you re­tire as you are more likely to have the en­ergy for it then. Make sure the area you’re mov­ing to has ac­ces­si­ble and good pub­lic trans­port, a strong so­cial net­work, and is close to friends and fam­ily. Oth­er­wise you could be­come very iso­lated and lonely in re­tire­ment.

It’s very im­por­tant to have a fi­nan­cial plan for any money you raise from down­siz­ing — and not to blow it all within a few years of re­tire­ment. Set aside a cer­tain amount of dis­pos­able in­come to fund your life­style but ad­dress other fi­nan­cial pri­or­i­ties too — such as having ad­e­quate pri­vate health in­sur­ance, keep­ing enough money for nurs­ing home care, and leav­ing an in­her­i­tance.

Re­mem­ber, if down­siz­ing isn’t for you and you’re cash-poor, you could raise some tax-free in­come in re­tire­ment by rent­ing out a room in your home un­der the rent-a-room scheme.

To help make ends meet, it’s im­por­tant to plan your re­tire­ment spend­ing care­fully. “Re­tire­ment spend­ing goes in three phrases,” said Bell. “When peo­ple first leave work, they of­ten spend a lot on ‘mis­cel­la­neous’ pur­chases such as trips abroad, or things which they hadn’t bought be­fore. They al­low money to leak away. Peo­ple should bud­get for, and con­trol, mis­cel­la­neous spend­ing, with­out be­ing too fru­gal.”

In the sec­ond phrase of re­tire­ment spend­ing, spend­ing tends to plateau — be­cause it is at this stage that peo­ple age and typ­i­cally stop trav­el­ling abroad, ac­cord­ing to Bell.

“In the third phrase, spend­ing goes up again as peo­ple of­ten have to pay for care,” said Bell. “So plan your spend­ing care­fully. En­joy your money though — there’s no point leav­ing a lot of it be­hind you.”

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