It’s important to start thinking about your options now. This will help you to work out at what age you might want to retire - and how much money you will need once you retire.
1.How do I work out how much I should be saving?
Everyone’s situation is different, and it really depends on the type of lifestyle that you want for yourself in retirement, as well as on your own specific circumstances. As a general rule of thumb, you should be aiming for an income in retirement of between 50% and 66% of your final salary.
You can use this handy pension calculator to help you assess your own particular circumstances - click here.
Of course, there are things that you may be paying for now that you won’t be paying for at retirement, including your mortgage, creche fees, college fees etc., which has the effect of reducing the income you will need in retirement.
2.When is the best time to take out a pension?
It is important to start planning for tomorrow right now. The sooner you start your pension, the more you will contribute and the longer it has to potentially grow. This will make a significant difference to the size of your savings at retirement.
3.Is it too late to start now?
It’s never too late to start saving for your future. The amount of money that you can put into your pension and get tax relief on actually increases as you get older. Depending on your age, you can save up to 40%* of your income into your pension, and claim back tax relief at your marginal rate. So even if you’re starting your pension late, you still have time to catch up.
*Assumes customer 60 or over. Source: Revenue.ie October 2020. It is important to note that tax relief is not automatically guaranteed; you must apply to and satisfy Revenue requirements. Revenue limits, terms and conditions apply.
4.I’m not sure if I can commit to long-term savings?
A pension plan is very flexible. You can usually stop and start when you need to, and increase or decrease your contributions at any time. This is particularly attractive in these current uncertain times.
It is better to start saving into your pension plan now, even if you put in less than you’d like to, or you’re not sure if you’ll be able to maintain the same level of contributions. Remember, you can usually change how much you save to suit your changing circumstances.
5.What if I change jobs?
Your pension needn’t suffer just because you change jobs, but it is worth checking all the numbers. Changing jobs and careers is quite common today. Indeed, it is estimated that younger workers today in the States could have as much as 15 to 20 jobs during their career.*
Whether you are thinking about moving roles within your chosen career path, looking at something completely new or staying at home with the kids, any pension that you have built up over the years with previous employers will continue to be invested and it will be available to you when you retire. You may also be able to move it into a plan in your own name or to a plan with another employer.
*Forbes, August 2012
Disclaimer
Life assurance and pensions products are provided by New Ireland Assurance Company plc., trading as Bank of Ireland Life. New Ireland Assurance Company plc., trading as Bank of Ireland Life is regulated by the Central Bank of Ireland.
Advice on Bank of Ireland Life products is provided by Bank of Ireland, trading as Bank of Ireland Insurance & Investments. Bank of Ireland trading as Bank of Ireland Insurance & Investments is regulated by the Central Bank of Ireland.
Bank of Ireland is a tied agent of New Ireland Assurance Company plc trading as Bank of Ireland Life for life assurance and pensions business.
Members of Bank of Ireland Group.
