Late Retirement – Irish Pension Plans

Any person who has done even a minimal amount of research into the realms of the Irish pension plan will certainly have noticed that one of the key pieces of advice that is offered by the majority of articles, providers, financial advisors etc, is that the best time to begin making contributions to a pension plan is as early as possible. The sooner you start then the greater the dividends reaped in retirement, however, where does this leave people who have put-off their retirement plans until later years? It is unsurprising that many people in this situation will be left with a sense of desperation and worry, but the good news is that not all is lost, far from it, there are still plenty of steps that can be taken to ensure that your retirement is comfortable, regardless of the age at which you begin making contributions to a pension plan.

Because any financial situation has an element of risk, it may be that a person had made good provisions for their retirement, but that some obstacle occurred and their plans were scuppered. For example, a person who chose not to pay into a pensions plan, but rather opted for the area of property development in order to finance their retirement may have found that the recent credit crisis debunked so much value off their assets that they no longer have the capacity to retire in the same manner as they had been planning. They may need to work for longer, or they could begin making contributions to a pension plan after all.

For any person who finds themselves in the situation whereby they are fast approaching retirement and yet have little provisions to see them through their autumn years, all is not lost, there is still hope, and a great deal of potential to be able to retire in comfort. Whilst it may be true that certain luxuries will not come so easily now, a high standard of living is still possible through careful planning and a well-managed pension plan.

If you are one of these people, then the following information should help you to organise your finances in such a way that you manage to retire comfortably:

The first place to start is to construct a written financial statement that documents your current financial situation. You will need to take account of the type of lifestyle you reasonably expect to have once you retire, you must factor in all your basic expenses such as electricy, water and telephone bills, tax rates, food, clothes etc.

Secondly you will need to draw up a balance sheet which must take account of the figure you have arrived at in the first step with the amount of money that you currently have set aside for retirement, such as any assets or savings. The figure you are left with will be your net worth, this could be a negative number or a positive number depending on your financial circumstances (NB. Remember to factor in any state benefits you will be entitled to, such as the state pension).  

Once you have taken these steps then you will be in a much better position for understanding exactly what it is that you need to do in order to make the correct contributions to a pension plan. An independent financial advisor or pension provider will be able to help you to work these issues out more precisely and present you with a financial plan with which to move forward.

If you find that you have a huge deficit between the amount of money that you actually have and the amount that you need, then it is important to begin to save every penny, this will mean making lifestyle changes, some as great as relocating to a smaller, cheaper property, other less drastic changes may involve changing the supermarket at which you shop.

Another possible step towards making adequate pension contributions is to defer retirement to a later date, working an additional period of time to ensure that more contributions can be made, and whilst working this extra period you will not be touching your existing pension and thus it will continue to grow too.

The most important lesson is to learn from your mistakes, if you have failed to be financially responsible and you now find yourself in a tricky predicament then you know that in future you will have to take a bit more care. You can still make good progress even if you have left your retirement plans till the last minute.

This article is based on the authors own observations and research and is not associated with any 3rd party organisations.