How would you like to go out for dinner with your future self after reading this blog?
When it comes to pensions, there’s a lot of information out there and many people feel as if they don’t know as much as they want to. Maybe you feel as if you don’t know who to turn to for help or advice? Whether you’re just starting or you have a pension but are feeling bogged down by the thoughts of it, it’s okay! It’s totally normal, the best time to learn is now.
So, where do we start? The beginning, of course! A pension is simply a long-term financial plan to help you maintain your quality of life once you retire. Your personal lifestyle maintenance plan, ensuring you can enjoy your well-earned retirement. There are 3 main types of pensions in Ireland;
- Occupational pensions: done through your employer.
- Personal pensions: usually for entrepreneurs and the self-employed.
- PRSA: a mobile pension that you can take with you from job-to-job, and which an employer can contribute towards.
Want to read more on the different types of pensions?
Types of Pensions: https://moneycube.ie/start-a-pension/types-of-pension/
State Pension: https://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/older_and_retired_people/state_pension_contributory.html
Whichever type of pension you use, the numbers are powerful!
Let’s make it simple. It’s saving for your financial future, with the added benefit of tax relief! You can qualify for tax relief between 20-40% based on your income bracket. So, if you want to invest €100 into your pension, you would only pay €80 while in the lower-income bracket. And your contribution would only be €60 if you find yourself in the higher-income bracket.
The average price of a coffee is €3, that’s €90 a month if you buy a coffee every day. Imagine that you currently are 35 years of age and plan to retire at age 68, and you’re in the higher income tax bracket. If you contributed this €90 to your pension instead of your daily coffee intake, the government would contribute about €60 in tax relief. That’s a total investment of around €150 a month. With the compounding impact, you could accumulate a fund value of over €250,000 for when you retire at 68! This would mean that when you retire, including the State Pension, you could get a monthly retirement income of about €3,300!
That sounds great but, what now? Well, in Ireland, there is a limit on voluntary contributions. This simply means that starting small & being consistent is better than one large contribution in the future. So, whether you’re starting a pension or just wanting to be more actively involved, invest in your financial future today!
Imagine yourself in 5 or 10 years. Talk to your future self. Will you look back and thank you for starting now? This is your opportunity to take control, get on board and reward yourself for doing something for yourself. Pensions Awareness Week is here to help you with a roadmap to secure your financial future.
Ready to start? Take your future self out for dinner and congratulate yourself for getting on board!
So, what are you waiting for? It’s time to get on board!
Want to know more or have some questions? Sign up for PAW21 for FREE, get involved and learn about how you can reward yourself today, tomorrow and in the future!
Are you ready to get a grip on your pension plans today? Get in contact with our partners from Moneycube to discuss your specific situation.