Pensions - Taking Responsibility for Your Future

So many media sources are running stories about the inequalities in the realm of the pensions industry, with company executives, government officials and the social elite receiving multi-million pension packages, whilst some of the poorest pensioners are living in abject poverty. The general population is becoming increasingly fearful about their future financial security, and these stories are invoking the questions: Am I saving enough to be able to comfortably retire when I finally stop working? If these rich CEO’s are fighting tooth and nail to keep their hands on €million packages, does that mean I too need similar amounts or face living in poverty? How much will I need to save to maintain a decent lifestyle?

The first thing that must be clarified is that it is down to the individual to make adequate provisions for their financial security in retirement, making the correct contributions, choosing well-tailored Irish pension plans and the such. To ensure that their retirement is going to be decent, a person must adopt long-term and short-term strategies, neglecting neither to the detriment of the other.

According to professionals in the financial sector, individuals need to be taking responsibility for their own financial future and security.

When people are young they often feel that they can put-off retirement to a later date, after all that time in their life is so far-away they have nearly a lifetime ahead of them still. Many will take ‘contribution holidays’ where they stop their pension plans for a while, maybe whilst they are saving for that sports car they always wanted, or a new bathroom, or whatever. But this action is counter-productive in the long-run, unless they wish to retire with slightly less income, or wish to work slightly longer than they otherwise would have done.

A must-take action when it comes to considering retirement is to establish how much money is needed to ensure that retirement will be financially secure, the amount this will be varies from person-to-person, some may be happy to re-locate to smaller properties once they retire, thus needing less of an income than they currently have, others will wish to maintain their lifestyle choices. People should address this issue by asking themselves how much of an annual income do they want? Then once they have a figure, the next move is to establish how much of an annual income they will receive from the assets, pensions and other investments that they currently have. Once this figure has been established they next need to ask themselves whether there is any shortfall between the two figures, and whether it is viable to be able to bridge the gap by the time they retire.

Panic in the media abounds; the State Pension scheme is collapsing they claim, the population is aging and there are not enough new people being born to maintain the same levels of social welfare they say, the global economy is going into melt-down the headlines scream. No wonder we all fear for our old-age, but these fears can be alleviated, there are ways of increasing the chances of having a comfortable retirement.

For example, if you find yourself with a large shortfall between what you have and what you need for retirement, then you will be afraid that you will not be able to look after yourself in your later years. But there are definite ways of helping yourself, buying fewer luxuries, downsizing your accommodation, increasing your pension contributions and any other ways you can think of for saving money.

The best means of securing a financially stable retirement still remains the trusty pensions plan. Pensions provide an excellent source of regular income during retirement, if planned well during the employment years. Pension plans come with huge tax-relief benefits.

In conclusion, the media have certainly over played the dangers of living in poverty in old-age, it takes careful and dedicated action to retire well, but it is easily achievable and not as financially draining as some sources would like you to believe.

This article is based on the authors own observations and research and is not associated with any 3rd party organizations.