In the 30 years IPF has been in business, we have seen over 4,000 clients transition into retirement. This can be an exciting yet anxious time for many as they adapt to their new day-to-day lifestyle.
One of the most significant changes to adjust to is your new financial situation. There are options available to enhance your retirement income, but these must be planned carefully and well in advance. You may be eligible for a regular pension from your employer, but this will inevitably be lower than your salary during your working life. For those relying on the State Pension, which is currently payable at age 66, many fear this may be pushed out further into the future.
Public Sector employees will receive a lump sum payment at retirement, but as we always say to our clients, unfortunately, this is only a once-off payment! It is not paid monthly or annually and therefore needs to be managed carefully to ensure it doesn’t dwindle too quickly. And with clients living nearly a third of their life into retirement, coupled with unprecedented inflation levels, leaving this money under the mattress devaluing is no longer a viable option for many.
One key piece of advice you will hear from Financial Planners is to regularly review your financial circumstances, particularly as you approach retirement. And a major part of this is your pension.
There are many benefits to reviewing your pension regularly, but these are our top three;
- In a study of 200 recently retired IPF clients, we found that those who met with their Advisor each year in the run-up to their retirement ended up with a fund five times larger than those who only engaged in the final months before they finished their employment.
- Upon turning age 60, you will become eligible to pay 40% of your gross salary towards your pension and receive full tax relief at your marginal rate. This is the highest level available to you throughout your working life. This eligibility ceases on the date you retire. It is advisable that you take advantage of those reliefs while they are available.
- Retirement can be a lot to get your head around. A financial plan will allow you to enjoy your retirement and your newfound free time! Relieve some of the stress by planning ahead and setting yourself a clear trajectory.
I recently spoke to some of our own IPF Advisors on this topic, and they all agreed that helping their clients at this pivotal time in their lives is one of the most enjoyable parts of their work. Seeing their clients into retirement with the security of a robust financial plan and the income to support their new lifestyle is incredibly rewarding.
They all had one similar message for those approaching retirement in the next few years; take action sooner rather than later. If the above facts and figures show us anything, it is that getting your ducks in a row now will help make your plans for retirement much more of a reality.
At IPF we have introduced a bespoke service called ‘The Retirement Glidepath’. Our aim is to guide our clients step-by-step through their options before, at, and after retirement. Then, you can settle into retirement and enjoy your newfound free time! To find out more about how this service could be of benefit to you, visit www.ipf.ie/glidepath.
Area Manager and Senior Financial Planner.