PENSIONS are a minefield, with the very mention of the word causing most people’s eyes to glaze over. But it is hugely important to have enough money for a decent retirement. Here are some tips to ensure you get on top of the pensions issue.
Don’t depend on the Government
It is a really risky strategy to think that if all else fails you will have the old-age pension to rely on in retirement, according to Ciaran Phelan, of the Irish Brokers Association.
“The reality is that this country is facing a pension crisis, which means that when those who are now in their 30s and 40s reach retirement age they may well find the State will not be able to support them financially,” he said.
There are currently 460,000 people over the age of 65, but this will shoot up to 1.4 million over 65-year-olds by 2050.
But there will be roughly the same number in the workforce. This means that fewer workers will be supporting more older people.
Have good eggs in safe baskets
Pension funds will go up and down in value through the course of their life.
While it is often advisable to leave the investment strategy to the experts, so too is it advisable to take an active interest in how your pension is performing, according to independent adviser at Goldcore in Dublin, Mark O’Byrne.
The majority of private sector workers now have defined contribution fund pensions. This means the pension you get depends on how much you put in, the length of time it is invested and the investment return.
“You need to ensure that you are on track and that your pension fund manager has your pension in well-diversified funds with a range of assets that will protect against the vagaries of the market and the economic cycle,” Mr O’Byrne said.
Interest rates and inflation will mean that pension saving is not an absolute science — you may need to make adjustments along the way to ensure you are on the right track to achieving your retirement goal.