Investing for Retirement
Pensions and Other Retirement Financial Planning Considerations.
Investing for Retirement? Let's put the retirement calculator away and start with the big one!
Over the years 2008 - 2009, falling stock markets and property values seriously eroded wealth,
raising concerns among the millions of baby boomers, who were well into their middle age, about their individual
retirement accounts and planning for retirement.
Many companies are switching from defined benefit pension schemes, to defined contribution, or have
closed the defined benefit scheme to new entrants.
Most defined benefit schemes are based on final salary, whereas the pension from a defined contribution scheme
depends on how much is paid into the scheme and the investment returns achieved.
Defined contribution schemes transfer the investment risk to the employee and require them to take a more active
interest in the pension fund performance.
So, How safe is your pension scheme?
- Ask questions of your employer and financial advisor.
- Know your scheme and know your rights.
- Pay attention to your financial affairs.
- Take an active interest.
If you don’t, why should anyone else?
The main sources of income in retirement are:
- Pension from employer-AVCs, PRSA, or retirement jobs provide a second line of defence should your employer scheme
run into difficulty.
- Additional Voluntary Contributions (AVCs) to secure additional benefits.
- Tax relief is available on contributions.
- Personal Retirement Savings Account (PRSA)
- An Approved Retirement Fund (ARF) for the self employed and proprietary directors, or small business retirement plans.
- State Pension
- Retirement Jobs
At retirement the following pension options may be available:
- Tax free lump sum, plus reduced pension
- Purchase annuity-insurance company provides guaranteed income for life, on payment of a single premium
- Invest in ARF
- Take taxed cash lump sum
This is typical of the areas that come up in my Retirement Coaching Practice -
however, please consult your employer/pension provider/financial advisor to discuss which options are available and suitable
for your particular circumstances.)
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