independent

Monday 16 September 2019

Points to remember for pension planning

Q HAVING PROMISED myself in early 2014 that I would start funding for my retirement, I have yet to follow through on this commitment! I want to make 2015 the year that I start funding for my retirement. I have never looked into it before so what are the important ideas I should remember when it comes to pension planning?

Have a Plan. Nobody plans to fail, but plenty of people fail to plan. This is a much used cliche, but unfortunately it is true! Planning is crucial to having a successful outcome to any given situation.

Don't Delay. Start Today with a Financial Broker you trust. If you don't save, you'll never reach your goal so the earlier you start the more likely it will be that you will achieve your goals.

Get Real...Returns. If you are looking to grow your wealth over time, cash and bonds aren't likely to get the job done, and inflation can take a big chunk out of your savings. Investing in equities entails more risk, but is also statistically likely to lead to greater returns. Asset allocation strategies can help you learn how to make picking the right mix of assets the core of your investment strategy.

Prepare for Rainy Days. Part of long-term planning involves accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. While you can't avoid all the bumps in the road, you can prepare in advance to mitigate the damage they can do.

Save More, Save Often. Your income should rise as time passes. Every time more cash comes into your pocket, you should increase the amount that you save. The key to reaching your goal as quickly as possible is to save as much as you can. The more money that goes into your retirement fund the more comfortable your retirement years will be.

Watch Your Spending. Holidays, cars, kids and all life's other expenses take a big chunk out of your salary. To maximise your savings you need to minimise your spending. Buying a home you can afford and living a lifestyle that is within your means and not funded by credit cards are all necessities if you want to boost your retirement savings.

Monitor Your Fund. There's no need to obsess over every movement in the stock market. Instead, check your retirement fund regularly.It might be a case that you have to rebalance the assets in your portfolio to keep your plan on track and your Financial Broker can help you make this assessment.

Maximise Your Contributions. As you get older the amount that you can contribute tax effectively to a pension plan increases. So much so that once you hit 60 you can contribute 40% of your earnings to a pension plan. Take advantage of this opportunity and make sure you maximise the amount you are putting into your pension. Remember, this is one of the most tax effective ways of saving, so don't let this chance to save get away.

Review, Review, Review. The closer you get to the day of your retirement the more important it will become to see if your retirement plan is still on track. This may necessitate meeting with your adviser on a more regular basis, maybe every 6 months. When you are so close to retiring it does not make sense to neglect what will probably be your most important asset after your home.

Have Patience. 'Get-rich quick' schemes are usually just that-schemes! The power of compounding takes time, so invest early, invest often and accept that the road to riches is often long and slow. With that in mind, the sooner you get started, the better your odds of achieving your goals.

Wexford People

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