MAKE RIGHT CHOICES

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

Avoid mak­ing de­ci­sions which could force you to work beyond re­tire­ment. Limit the amount of debt you take on over your work­ing life — and clear that debt as early as you can. Most banks of­fer mort­gages which can be re­paid up un­til the age of 70 — don’t be tempted to take out such a mort­gage be­cause un­less you clear it early, you’ll need to work un­til you’re 70 to pay your loan off. In­stead, have your mort­gage paid off by the age of 65. Top­ping up your mort­gage can be a big mis­take — par­tic­u­larly if you do so close to re­tire­ment. Re­sist the temp­ta­tion or pressure to top up your mort­gage so that you can give your child a de­posit to­wards their first home.

Only top up your mort­gage if you have a real fi­nan­cial need to do so and are sure you can clear it by the age of 65. Be aware that un­fore­seen cir­cum­stances, such as an ill­ness or re­dun­dancy, could see you strug­gle to re­pay the loan.

Having chil­dren late in life is another rea­son peo­ple of­ten have to work into re­tire­ment. Should you have chil­dren in your late 30s or early 40s, your chil­dren could still be in col­lege when you re­tire. It could cost over €40,000 to send one child to col­lege for four years. To avoid having to work into re­tire­ment to pay for col­lege bills, start sav­ing for your child’s col­lege ed­u­ca­tion once they’re born — or even be­fore that. Oth­er­wise, you may have to bor­row to fund the cost of your child’s col­lege ed­u­ca­tion and such loans could eas­ily fol­low you into your late 60s.

Don’t over­stretch your­self fi­nan­cially when sup­port­ing your chil­dren — even if it is to help them get onto the housing lad­der or to over­come a fi­nan­cial dif­fi­culty. Rather, en­cour­age your chil­dren to be fi­nan­cially in­de­pen­dent and re­spon­si­ble and to save for big-ticket items them­selves — so that any sup­port you pro­vide doesn’t put you un­der fi­nan­cial pressure in your re­tire­ment. Be care­ful about acting as guar­an­tor for a mort­gage as by do­ing so, you could be called on in re­tire­ment to re­pay your child’s mort­gage and ul­ti­mately you could lose your home if your child strug­gles to re­pay the loan.

Poor in­vest­ment de­ci­sions or bad luck with in­vest­ments could also see you worse off fi­nan­cially than you ex­pected to be in re­tire­ment. So get in­de­pen­dent fi­nan­cial ad­vice if mak­ing any ma­jor in­vest­ment de­ci­sions, don’t fall for in­vest­ment fads, and reg­u­larly review your in­vest­ments and pen­sion to en­sure they’re liv­ing up to your ex­pec­ta­tions. Be par­tic­u­larly care­ful about in­vest­ing your money af­ter you re­tire. Don’t make hasty or ill-in­formed in­vest­ment de­ci­sions — and don’t put your money into high-risk in­vest­ments. “When in­vest­ing post-re­tire­ment, if it looks too good to be true, it prob­a­bly is,” said Paul Kenny, the for­mer Pen­sions Om­buds­man who is now a course leader with the RPC. “High po­ten­tial re­wards gen­er­ally carry high risk.”

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