Kevin Walsh • 25 Oct 2018
Reviewing your Pension Plan
It’s great you have a pension plan in place, but do you know what income it will provide you with in retirement? Putting in place a pension plan is the first step on your journey to financial independence in retirement. However, it doesn’t necessarily mean your financial future is taken care of.
Reviewing your pension plan with your financial advisor at least once a year will allow you to assess your progress to date and give you the opportunity to adjust the amount you’re saving, your expectations, or both so that there are no surprises as retirement approaches.
It is important to have a clear understanding of what income your current level of pension savings is likely to provide you with when you stop working. You should then compare this against the income you think you will need to support the lifestyle you want when you do eventually decide to retire.
How much should I be saving?
Everyone’s situation is different and the amount you should save towards your pension really depends on the type of lifestyle you want in retirement, as well as on your own specific circumstances. One approach is to use your current income and outgoings as a starting point. Using a monthly bank statement plus any known annual outgoings you can add and remove costs that will be associated with your retirement years. For example, when you retire you may no longer have monthly mortgage repayments or have to pay for children’s education, but you may take more holidays or have higher medical expenses. This will give you a rough idea of the income you might need in retirement. We at CMCC Financial Solutions can work with you to explore the amount you should be saving each month to meet your income needs in retirement.
Have your circumstances changed in recent years?
If your circumstances have changed since you started your pension plan or last reviewed it then you should review your plan in light of those changes.
Have you changed job?
Has your income increased?
Do you now have dependants?
Did you start your pension with a low contribution with the aim of increasing it?
Are you happy with your current pension provider?
Any change to your personal circumstances should result in you reviewing your existing pension plan. Some changes in circumstances are outside our control and the age of eligibility to the state contributory pension has changed from age 65 to age 68 if you were born on or after 1st January 1961. That’s a potential 3 year gap in retirement income which could mean a shortfall of almost €76,000 for a married couple. You should review your pension plan immediately to establish if it takes into account this delay in payment.
We at CMCC Financial Solutions are available to help you review your pension plan irrespective of which product provider it’s with. There is no charge for this service and please call our team if this is something you would like to discuss in greater detail.