Today, we are talking about reasons why you should start a pension. Have you ever thought about what your life will be like once you retire? The best way to secure your future is to start investing in a pension now. The sooner you do it, the better.
1. The state pension may not be enough
Could you rely on the state pension alone? Currently, for people aged 66 and over, the state pension is € 248.30 per week. It might not be enough to cover all your needs during retirement. The state pension might also be lower than your current income. Therefore, you won’t be able to keep the same standards of living once you retire.
In addition, with the economic and demographic situation in Ireland, the country might be forced to reduce the cost of the state pension. Indeed, we are living longer, and people need the state pension for a longer period of time. In other words, you can’t be guaranteed that the current pension income now will be the same once you retire.
2. life expectancy is increasing in Ireland
On average, we are living longer, which is obviously a good thing. However, it means that you may have to save more money because your retirement will be longer. Investing in a pension will help you predict how much money you will have and how much you need to save over time. On top of that, you have the option to review your monthly payments and increase them if your income increases.
3. You will save money on taxes
Indeed, investing in a pension is a tax-efficient way to save your money in the long term. First, you are eligible for tax relief on your pension contributions. That is, in calculating your Income tax, income does not take into account the part of your income that went into your pension. To find out more, read our article on Tax relief on pension contributions here.
Additionally, you can benefit from a tax-free lump sum of money at retirement. Once you withdraw, you can decide to take a part of your pension fund as a lump sum. It’s important to know that the maximum tax-free amount that you can take is € 200,000.
4. You can take control of your money
When investing in a pension, you have many investment options that you can choose from. Based on your current situation and your plans for the future, a financial advisor will guide you and find the best option for you. In fact, you can have access to a wide range of investment opportunities, such as property funds, bonds, share trading accounts, and more.
Plus, at retirement, you can choose how you want to use your funds, and in some cases, you might be able to retire early or take your money early. For more information and advice please contact one of our qualified financial advisors and book a free 15 min call.
5. A pension can be life insurance for your loved ones
Many pension schemes, will pay out a lump sum in the event of your death to people that you nominate as your dependents. Also, other pension schemes will pay what’s called a “survivor pension” to a surviving dependent. For example, your spouse or child.
6. You can start a pension with a low budget
One of the misconceptions about pensions is that you need a lot of money to start. Fortunately, this is not true. Indeed, in Ireland, you can find options for as little as € 50 per month. In the long term, you will be able to increase the monthly payments if you wish, but at least you will already have a base.
Not to mention that the sooner you start saving, the better. You have more time to build your fund, you will also surely save more money.
7. You will be financially independent
Think about all of the things that you want to do when you retire. Maybe travel the world, move to the country or simply live within your means. No matter what your plans are, you don’t want to be worried about money. That’s why saving for retirement now would be a smart choice.
If you already have a source of income for your retirement, it’s even better! Because your pension fund will act as additional income and provide you with financial security.
Our financial advisors will help you make an informed decision and find the best option for you. Book a free 15 min call with a financial advisor.
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