PENSIONS MADE SIMPLE
Complete two-page guide to your own nest egg,
1 INTRODUCTION:
Let’s start with the good news — we are living longer than ever before. Latest statistics suggest that men and women in Ireland can expect to live to 81.5 years on average. There’s no downside to a longer life, right? Consider this — longer life means we will need to provide ourselves with an income for a longer period of time post retirement.
We might quip about kids paying for our nursing homes, but we all know that it is our own responsibility to provide for our own retirement. Building your personal pension fund is the obvious answer — remember, at current maximum rates, the State pension provides an income of only about one-third of average annual earnings.
Pensions are a complex area but they should not be neglected. The earlier and more you contribute, the more likely you are to achieve financial security in retirement. There is a sound reason that actuaries and the Government actively encourage people to think about pension planning sooner rather than later.
So, regardless of whether you are just starting out on your career path or getting close to retirement, you should be planning for your retirement now. It is a topic that has to be considered by everyone at some stage.
However, the motivation behind an individual’s focus on pension matters varies depending on that individual’s stage of life.
For example, a 25-year-old is likely to be more enamoured by the thought of the tax relief available on contributions to a pension fund, while a 55-year-old is likely to be thinking about the ultimate payout and benefits from the fund.
This article aims to simplify matters by providing information in sections so that you can cut to the part relevant to you, and hopefully the ‘jargon buster’ will help to explain the meanings of certain pension-related terminology.