Having a pension is a great starting point when preparing for later life, but almost half of us opt not to review our pensions once they’re set up. It’s important to consider how much you will need to continue living comfortably in the future and ensure you are saving enough to sustain that lifestyle when the time comes to retire – even if that is decades away.
Reviewing the plan every couple of years, especially after big life events like starting a new job, changing work patterns or welcoming a baby into the family, can help keep you on track to a secure financial future and reduce strain in later years.
How regular pension reviews empower you
Regularly reviewing your pension puts you in control. Not sure where to start? The Competition and Consumer Protection Commission’s (CCPC) website has lots of clear and helpful information to help get you started.
CCPC says that staying actively aware and managing your pension means you can:
Why we delay pension planning
Planning for the future can be challenging, largely thanks to our tendency to stay focused on our immediate financial needs rather than long-term goals or benefits. However, investing in your future is a gift that will pay off in later life.
Research shows that many people visualise retirement as a continuation of their current way of life rather than thinking about what the future may look like. People believe that costs will be lower, and life will be easier because of less work stress, fewer demands from dependants, and reduced outgoings or expenses. All of this can lead to underestimating future long-term costs.
It is also important to be aware that the state pension, which has a maximum payment of €1,109.20 per month, may not be enough to cover everything you might need, particularly when you consider factors like the rising cost of housing, food, and energy.
Therefore, whatever type of pension you may have, assessing it often is key to helping you stay on track for the later years.
Major life events and your pension
Some of the major milestones in life come with great excitement, as well as new financial responsibilities. While it’s generally recommended to review your pension every 12 to 24 months, it’s a good idea to reassess along the way as your life evolves and changes.
Some life events that can shape your retirement savings include:
Marriage: Getting married can impact a household’s overall income and the level of tax paid in a household. This is a big life change, so it is an excellent time to make sure future plans are aligned and you are both taking the necessary steps to meet your future needs.
Buying a home: A mortgage is a large outgoing which may impact the amount you can contribute to your pension. Remember the level of contributions to a pension can usually be adjusted, so in times of need you could adjust accordingly and continue contributing to your pension so you are not left short in the future.
Starting a family: Growing your family can bring on many new emotions but it can also come with new expenses and can lead to one or other parent reducing their hours or going part time, which means less family income. It’s wise to check your pension to ensure you can afford your payments and also that it will meet your future needs.
Making a plan
It’s normal to sometimes feel overwhelmed about your finances but taking small steps to better understand your current situation can make a big difference in the long term.
If you are unsure where to start, the best place is your annual pension booklet, this can be called an annual benefit statement. This includes your contributions, likely future fund value and investment strategy. However, don’t worry if you’re uncertain of the contents of this booklet; you can always speak to a qualified professional who can support you in your review.
If you don’t have your annual pension booklet, talk to your employer, your pension provider, or a financial advisor. They will support you and direct you to someone who can discuss your policy. You can also use the resources provided by the CCPC. They offer easy-to-understand information on pensions to help you make the most informed decision possible.
And remember, the sooner you take control, the better your chances of enjoying a financially secure retirement.
Source: Rachael Victoria, Irish Independent, 27th of September 2024.
How We Help
As a Financial Planning / Advisor Firm in Louth we are available to discuss any and all queries that you may have in relation to Pensions. Arrange a meeting by clicking this link to my Calendly Diary, emailing info@smartfinance.ie or calling 087 8144 104.
Smart Finance Life Planning Ltd., Bawntaaffe, Monasterboice, Drogheda, Co. Louth. A92 E2V3.
