Construction Pension Advice: What to do differently in 2017?
Susan O’Mara offers some timely Pension Advice for 2017
In trying to compile my annual Pension Advice for Construction Magazine readers top tips for the coming year, I researched far and wide for pearls of wisdom that I might not have already thought of myself....this was my favourite.
“Get Your Finances – and body—in shape – one study showed that more exercise leads to higher pay because you tend to be more productive after you’ve worked up a sweat.
Habits and discipline
“So taking up running may help amp up your financial game. Plus, all the habits and discipline associated with, say, running marathons, are also associated with managing your money well.”
I couldn’t find the corresponding “one” study; however, if it turns out that by the end of 2017 you aren’t better off financially, at least you will be fitter!
Nothing to lose!
“If you are mid-way through your working life you ought to know how much you need to have saved or have yet to save for your retirement.”
What will YOUR retirement cost?
On a more serious note however, in looking back over 2016, the majority of clients I met throughout the year (both young and older) hadn’t ever really crunched the numbers on the cost of their own retirement.
And with this in mind, this is my only tip for 2017:
If you do nothing else with your personal finances in 2017, do try to consider the actual cost of your own retirement.
The internet is very useful for this; if your own pension provider doesn’t already have a pension calculator then there are many online.
The Pension Authority has one, as do my colleagues in CERS – which is on their website (www.cers.ie).
But most people I spoke to didn’t visit them.
If you are mid-way through your working life you ought to know how much you need to have saved or have yet to save for your retirement.
If you are still in the beginning phase, understanding that starting earlier will take the pressure off down the road will help you and be a helpful motivator.
You can see from the table in this table value of saving a monthly amount of €100 will accumulate a much greater fund at age 65 if you start at age 25 compared to starting at age 35 – that is €34,000 to be precise.
The monthly premium over the same period (25 – 35) is only €12,000 more over the same 10 years – which means that starting at age 25, instead of waiting until age 35, has a net gain of €22,000.
This is due to the 10 years more of extra investment growth*.
Age at Commencement
*for the purposes of this estimate is 3.09% per annum
If you have been diligently contributing to a pension scheme all along, use the pension calculator to estimate the value of your current fund as retirement income.
What income are you on track for? How does it measure up against your current lifestyle and retirement goals?
If there is a gap, the sooner you know, the sooner you can remedy it.
Pension Advice for 2017
Overall for 2017, the important thing to know is how much you’ve saved and how much you still need to.
So, go on. Dig out that benefit statement from your pension provider and crunch the numbers!
This article was first published in CIF Construction Magazine