Who is responsible for your income in retirement?
Financial and economic experts across the world are encouraging us all to save for retirement.
BEFORE you answer that question, consider these facts. In 1990 there were only 73,000 people in receipt of the state contributory pension. At the end of 2020 there was almost 450,000 people in receipt of this same social insurance pension.
Financial and economic experts across the world are encouraging us all to save for retirement. This is to ensure our financial independence, and to avoid poverty in retirement. The adverts say: “don’t wait to start in five years or 10 years time. Start now”.
Why now? What’s the rush? Is it for their well-being? Or for our wellness?
Well the State pension contributory (SPC) from January 1, 2023, is €265.30 per week. 50 years ago this was payable from 70. The state pension age has since been reduced to 66.
The Pensions Commission Report of 2021 reported that without social welfare benefits, 85% of the over-65s would be at risk of poverty. Therefore, those in the know are stressing the need to make it a top priority now if you want to maintain (or improve) your current lifestyle, in your silver-haired years.
In our experience, the more educated, professional, and financially literate 30 and 40-year-olds are paying attention. They are deferring paying themselves a little now, to gain a lot.
They certainly want a better standard of living than what the SPC currently offers. The workforce also realise that they might want to give themselves the option to reduce their working hours, maybe take more holidays, before reaching SPC qualifying age.
What are the consequences of not planning, apart from paying more income tax now?
How many years do you expect to live comfortably in retirement and on what income?