As you think about the details of retirement planning, there are two big questions you need to ask:
- How much income will I need?
- How long will it need to last?
The answers aren't as simple as the questions, of course - but we can help you to get a clearer idea of what your financial needs might be during your retirement, and how they could change over time. The more you know about this, the easier it will be to plan a realistic budget and make sure you don't overspend.
Some more questions to think about
First of all, check how much you have already saved into your pension plan – or any other kind of savings or investment accounts which you’ll be using to help fund your retirement
- Can I afford to contribute more to my pension plan?
- Are there any areas where I could be spending less?
To help you answer these questions, focus on your regular outgoings to see how much you could afford to put aside towards funding your retirement. You can do this by calculating the below:
What is your monthly take-home pay after deductions?
The next stage is to consider how much your pension plan will be worth when you retire. This means asking yourself:
- Is it likely that I’ll be able to increase contributions to my pension plan in the future? And could I get more from my employer?
- How many more years will I be paying into pension plan?
- Do I need to put any more money away?
- Do I plan on continuing to work after my retirement date?
How much will you have to live on?
Even if you’re close to retirement, and have a clear idea how much money is likely to be in your pension plan when you finish work, it’s sometimes hard to see how that figure might translate into a monthly income.
Your pension plan may run into thousands of pounds, but how long will this last, and how much can you afford to spend each month?
How long will your money need to last?
This will depend on how long you will be retired.
Many people underestimate their life expectancy, and run the risk of running out of money in their later years, or having to live on a smaller amount than they intended.
It’s never too early to prepare for retirement. The earlier you start thinking about what kind of retirement you want and where your money is going to come from, the more control you can have over that period of your life.
Need some advice?
A Financial Broker is a great place to start. To find a Financial Broker visit brokersireland.ie.