Investing for retirement
Pensions and Other Retirement Financial Planning Considerations.
When it comes to Investing for Retirement, let's start with the big one!
Over the past year (2008 - 2009), falling stock markets and property values have seriously eroded wealth, raising concerns among the millions of baby boomers, who are now well into their middle age, about their financial readiness 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.)
Back from Investing for Retirement to Retirement Financial Planning
|
