The tradition of retiring at age 65 and never working again is an outdated one. People now ‘glide’ toward the retirement age of 66, rather than hitting it head-on.
“For many people, a pension ranks alongside cleaning out your sock drawer in terms of popularity,” says Jim Connolly, Head of Pensions Technical at Goodbody.
“Although most of us actively contribute to some form of pension, we remain detached and disinterested in it. Pensions are for old age, and we largely adopt the intention to jump off that bridge whenever we get to it.”
However, the journey from your first payslip to your final pay cheque can span a 40-year period, during which a lot will happen. Marriage, divorce, kids, careers, illness, promotion, redundancy and business opportunity all come with pension implications. You need to build up a relationship with your pension. Get to know it. Spend some time, and money, on it.
Enjoy yourself - it’s later than you think – but Goodbody can help you get your ducks in a row while you’re at it, writes Simon O’Neill
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Your Time, Your Terms
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Get the facts and make informed decisions about your transition
to retirement
by downloading
the Goodbody Retirement Playbook
Download this extensive guide today and you can start to plan ahead for all eventualities and enjoy the peace of mind that comes with a fulfilled retirement. Don’t make one of life’s most important decisions with just half of the information or after the facts — speak to a Goodbody pension expert first.
Your retirement, reimagined
When you finally start the retirement process, of course there will be pitfalls along the way. Some of the most common include:
Not seeking advice This is where the costliest mistakes originate. For example, simple nuances, such as the term Final Salary, can often cause lump sums to be underestimated. Revenue allows you to include all sources of taxable income in this definition and they allow you to look back for up to 10 years to determine the best figure for you. Using the wrong figure could result in your lump sum being lower than it should be.
Assuming your pension administrator is correct This also a common mistake. Your pension administrator will spit out retirement options based on the salary information recorded on their system. They will not go back over 10 years to see if a higher definition of final salary is warranted.
Not knowing the rules Individuals with dual earnings from a self-employed source and an employed source (a HSE consultant, for example) often unknowingly fall foul of a Revenue rule that requires them to exhaust their scope for pensions tax relief by making AVCs before assessing their scope for relief on their self-employed source. Proper awareness of these rules is essential to avoid costly mistakes.
A comprehensive list of ‘watch outs’ are provided in Goodbody’s Retirement Playbook which you can download here.
TIME TO RETIRE THOSE
COMMON ERRORS
It’s natural to associate retirement with pensions, but it’s important not to isolate the lonely pension pot and expect it to sustain you in your retirement. Retirement is not a rainy day, it’s a torrent, and one that your entire net worth has been built to handle. When considering your retirement planning, you need to think about the wider portfolio of resources you may have to draw upon. A holistic view is the key to successful wealth management ahead of your twilight years.
So, don’t consider retirement merely in terms of calling down your pension. By taking a broader, more nuanced approach, you can make sure you have all you need to fully enjoy your retirement and the opportunities that this life stage brings your way.
This is a marking communication. Warning: Nothing presented in the above advertisement constitutes investment advice or a personal recommendation as it does not take into account the investment objectives, knowledge and experience or financial situation of any individual. Not all recommendations are necessarily suitable for all investors and Goodbody recommends that specific advice considering your personal circumstances should always be sought prior to making any investment. Goodbody Stockbrokers UC, trading as Goodbody, is regulated by the Central Bank of Ireland and Goodbody Stockbrokers UC is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Goodbody is a member of Euronext Dublin and the London Stock Exchange. Goodbody is a wholly owned subsidiary of Allied Irish Banks, p.l.c.
The old ways of retirement – just like the old ways of working – have changed irrevocably over the past few years. The traditional concept of retirement has been superseded by the new realities of the work-life balance. The idea of someone crash-landing into retirement at the age of 65 is now a redundant concept,” says Jim Connolly. “Today, retirement is more of a considered glide-path, unfolding over a period of years. The way your granddad retired will be entirely different to the way you will. In fact, many of our clients never fully retire. They simply reinvent themselves.”
With careful planning, retirees often find the process less daunting than they imagined. And many largely overestimate the amount they need to sustain themselves in retirement, meaning that they have more than enough from a monetary point of view.
With sound, practical advice guided by sharp insight, strategic foresight, and a deep commitment to understanding each client’s unique situation and goals, Goodbody can advise clients on the best approach for a smooth transition, no matter what stage of the journey they find themselves on.
RETIREMENT IS NOT JUST ABOUT PENSIONS
With the evolution of pension rules and career lifestyles, navigating and timing a successful retirement is a sophisticated and complex exercise that should not be approached on a DIY basis. There are simply too many nuances, subtleties and anomalies in pension rules that make it easy for individuals to miss some obvious tricks.
Knowing that you don’t have to purchase your Approved Retirement Fund (ARF), or annuity, from your current pension provider may seem obvious, but it is only obvious if you know it. Many people are not aware of this open market option and the last entity to tell them will be their current provider. This has left countless retirees eternally landlocked to providers because they filled out that provider’s claim form without knowing they could shop around.
A JOURNEY THAT CALLS FOR SUPPORT
With the evolution of pension rules and career lifestyles, navigating and timing a successful retirement is a sophisticated and complex exercise that should not be approached on a DIY basis
The Goodbody Retirement Playbook also deals with retirement for public sector workers, who benefit from defined benefit pension schemes. Public servants with high earnings or dual employment, such as HSE consultants or members of the judiciary, tend to be the most complex characters to deal with in terms of pensions, as many have a mix of public and private sector benefits. Advanced planning is crucial for these individuals as they frequently breach fund thresholds. However, they also have unique strategies available to manage their exposure to Chargeable Excess Tax (CET), which need to be explored on a case-by-case basis.
PUBLIC SECTOR RETIREES
For those nearing retirement, this is an invaluable opportunity to take control of your financial future. Goodbody’s client-focused ethos, strategic foresight, and dedication to long-term prosperity ensure that you’ll receive personalised support every step of the way. Remember, your financial health is a part of your overall health. There is a lot to a successful retirement process. Retiring is something most people will only do once. Empower yourself to do it right.
Revisiting Your Retirement Goals
Retiring abroad appeals to many Irish individuals, but strict tax rules often deter them from doing so. Broadly, to achieve a non-resident tax status, you must spend more than 183 days abroad annually for three consecutive years — an obstacle for those wishing to stay close to family. However, significant pension benefits exist for those who genuinely relocate. Interestingly, if you do relocate abroad, you and your pension do not have to land in the same country. Malta is the destination where most Irish pension pots end up. And the timing of any transfer is crucial, as pensions must be exported pre-retirement. You cannot transfer an ARF overseas. Independent advice is essential to avoid costly tax pitfalls.
RETIRING ABROAD
And the nuggets are plentiful. You can have as many retirements as you’ve had jobs. You can make bed and breakfast contributions overnight to avail of tax relief. You can often split your pension into segments to access part of your pot. You can crack open legacy pension pots from age of 50. Working with a pension expert such as Goodbody helps you navigate these complexities effectively.
“When we bring retirement into the conversation with our clients,” Connolly adds, “we don’t fixate on ‘the pension’. Retirement is about income, regardless of the source.”
And when a person adds up all their resources from every rainy-day pot, they often find they don’t just have enough, but they have more than enough. Their key challenge becomes succession, and how to transition their wealth to the next generation.
Goodbody’s A Lasting Legacy Guide to Inheritance and Estate Planning provides further guidance on all aspects of inheritance and estate planning. Whilst the ultimate financial plan would be to increase your spending habits in retirement to ensure your final cheque bounces, most of us want to leave our loved ones with some money.
Enjoy yourself - it’s later than you think – but Goodbody can help you get your ducks in a row while you’re at it, writes Simon O’Neill
The tradition of retiring at age 65 and never working again is an outdated one.People now ‘glide’ toward the retirement age of 66, rather than hitting it head-on.
“For many people, a pension ranks alongside cleaning out your sock drawer in terms of popularity,” says Jim Connolly, Head of Pensions Technical at Goodbody.
“Although most of us actively contribute to some form of pension, we remain detached and disinterested in it. Pensions are for old age, and we largely adopt the intention to jump off that bridge whenever we get to it.”
However, the journey from your first payslip to your final pay cheque can span a 40-year period, during which a lot will happen. Marriage, divorce, kids, careers, illness, promotion, redundancy and business opportunity all come with pension implications. You need to build up a relationship with your pension. Get to know it. Spend some time, and money, on it.
Get the facts and make informed decisions about your transition
to retirement
by downloading
the Goodbody Retirement Playbook
The tradition of retiring at age 65 and never working again is an outdated one.People now ‘glide’ toward the retirement age of 66, rather than hitting it head-on.
“For many people, a pension ranks alongside cleaning out your sock drawer in terms of popularity,” says Jim Connolly, Head of Pensions Technical at Goodbody.
“Although most of us actively contribute to some form of pension, we remain detached and disinterested in it. Pensions are for old age, and we largely adopt the intention to jump off that bridge whenever we get to it.”
However, the journey from your first payslip to your final pay cheque can span a 40-year period, during which a lot will happen. Marriage, divorce, kids, careers, illness, promotion, redundancy and business opportunity all come with pension implications. You need to build up a relationship with your pension. Get to know it. Spend some time, and money, on it.