There has been a big focus on pensions over the course of 2022. From concern around the impact of market volatility to the Government proposals on auto-enrolment and the recent tax deadlines. But one thing remains clear it is never too late to start your retirement planning. And it is also never too early!
It is clear that younger age groups have little interest in retirement planning. The chart below demonstrates that age is a significant motivational factor when it comes to retirement planning. Interest is low at a younger age and there is only a significant increase when an individual reaches their late forties and into their fifties. While it is not too late to start a pension at that stage, it does leave far less time to make a meaningful provision.
The sooner you start to make a provision for your retirement, the easier it is financially for two main reasons:
- The cost of the outlay is spread over a longer period and so the financial impact is reduced
- Investing early and staying invested allows more time and potential for your savings to grow
There are many reasons cited for not starting a pension earlier. These range from paying off student loans, saving to purchase a home to not considering you can afford to start or just simply not getting around to it. However, the fact is it’s never too early to start saving for retirement. Once you start working and can set aside even a small amount each month, you will be on your way to building a fund. Then as you earn more in your career, you can increase the amount you contribute.
The key is to start. The sooner you can start to save money for the future, the more secure you’re going to feel about retirement. So, no matter what age you are or what stage of your career, it’s worth thinking about your pension. Just get in touch if you’d like to start the conversation.
It’s that time of year again. A lot of people are thinking about pensions to gain the benefit from the upcoming tax deadlines. But there’s been a lot of questions about pensions this year. From market volatility to auto-enrolment, it can seem like a bit of a minefield. Here, Anne O’Doherty, our Head of Life & Pensions answers the most commonly asked questions we have received and shares our view on how best to manage your pension.
I haven’t started a pension yet, when is the right time to do this?
Saving for retirement is extremely important. People are living longer and leading more active lives in retirement. As a result, it is more important than ever for you to think about where your income will come from when you retire. Starting a pension is one of the smartest decisions you can make. The earlier you start the better. But it is also never too late to start planning for the financial future you want. Have a look at this Pension and Retirement Calculator on our website. It can give you help with your retirement planning and to see you how much you need to put away for later in life.
I’ve read a lot of headlines about auto-enrolment recently – what is it?
Quite simply auto-enrolment is a new scheme announced by Government earlier this year. The aim of it is to try to encourage people to make adequate provision for their income at retirement. It will work by having employers automatically enrol their employees into a workplace pension scheme. It is aimed at those people who currently are not in a company pension scheme. The Government has estimated this number to be around 750k between the ages of 23 and 60 (earning more than €20,000). Our recent blog covered all aspects of auto-enrolment, and you can read it here.
Is my pension safe given the current market volatility?
We are being asked this a lot by our clients given the rocky year markets have endured. The first and most important thing to remember is that a pension is a long-term investment. By their nature markets have ups and downs but over the course of an investment these tend to level out. There are many factors that can affect the markets. Volatility is usually caused by political and economic factors, industry or sector changes or even individual company news. While it can be difficult to witness any declines in your portfolio, it is important to apply logic and not act out of emotion. The most important thing for an investor to do is hold their course. History has shown that those who have stayed invested during previous periods of market volatility have achieved their original investment objectives.
I’m getting nearer retirement, should I make any changes to my pension arrangements?
As a general rule you need to be between 60 and 75 years of age to take your pension benefits. If you are are about 10 years from your retirement age, then there are a few things you need to start considering. There are lots of things that you have had to think about to date – building your career, paying the mortgage, educating your children and maybe even saving for a rainy day. These are important. But as you start approaching retirement it’s now important to take advantage of the last 10 years of your working life to make sure you maximise your financial position when you do retire. This can mean increasing regular contributions, making additional lump sum contributions or switching funds to lower risk options. Depending on your own personal circumstances, we can talk you through what the best approach is now.
What is the tax situation for my pension contributions?
It is safe to say that a pension is one of the most tax-efficient ways of saving money. Tax relief is the greatest benefit of saving into a pension. If you’re paying tax at 20%, then you’re entitled to 20% back on pension contributions. If you’re paying tax on your salary at the highest rate, then you’re entitled to get 40% back on any pension contribution that you make. So, it doesn’t cost as much as you may have thought to save for retirement. You can also benefit from higher limits for tax relief as you get older as these are age-related.
There were many miles clocked up in their walking shoes during lockdown. So as restrictions started to lift a team from Quintas Wealth Management challenged themselves to continue the habit. And even better, to do this for the benefit of others as well as themselves by taking on a walking challenge in aid of LauraLynn.
Anne, Lynda and Shirley agreed to support each other in completing the “100k in May” challenge. This challenge was part of a national fundraising drive by LauraLynn, the children’s hospice. Not only was it fun and motivating but it was a great way to raise funds for this amazing organisation.
LauraLynn is a hospice for children with life-limiting conditions and provides residential care for children and young adults with disabilities. The team selected the charity as it is close to their hearts knowing families who have received invaluable care and assistance from them.
“We were delighted to continue our walking habit and to be able to do this to support LauraLynn. They are financed largely through the generosity of public donations for their children’s hospice and palliative care service and as with many charities found fundraising more challenging during 2020.” commented Anne O’Doherty, Head of Life & Pensions with Quintas Wealth Management.
This was the first time the team had supported LauraLynn with a fundraiser. And the team smashed their target in monies raised and steps walked. Huge congratulations to them and thank you to everyone who supported them!