The winter months can make driving more dangerous in many ways, but two elements you need to be particularly cautious of whilst driving are ice and snow. To decrease your risk of an accident or damaging your car, follow our tips to stay safe when driving in these slippery conditions.
Plan before your journey:
Check weather forecasts and traffics updates so you know what to expect and can be fully prepared.
Make sure your mobile phone is fully charged and your car has a fully kitted emergency kit. Click here, for our breakdown survival guide.
Choose a route using main roads where possible as the surface is often better and they are more likely to be gritted.
Keep clear of secondary roads and high ground, as they are exposed more directly to weather extremes.
Vehicle checks before your journey:
Tyres: Cold weather can cause tyre pressure to decrease, which affects traction and makes driving conditions more dangerous. Make sure the tyre pressure of your wheels matches the manufacturer’s specifications (found in the manual or on the door pillar). Tyre depth should be around 3mm.
Windows: Use a screen scraper or de-icer to clear your windows for full visibility. Do not use boiling hot water on your windscreen as you risk cracking the glass. Check your wipers are functioning fully, and filled with screen wash.
Heater: Learn how the heater in car works, not just to keep yourself warm but also to effectively clear any mist or condensation from your windows, allowing better visibility.
Coolant: If the weather is very cold, you should check your car’s coolant, or antifreeze, levels. This makes sure your engine doesn’t freeze or overheat. For more details on correct usage of coolant click here.
Lights: Ensure all lights are working and clean, to optimise their performance.
Fuel: It is a good idea to keep plenty of fuel in the tank during winter months especially when you may end up having to re-route due to bad road conditions from ice, snow, flooding or fallen debris.
Snow and ice cover: If ice is on your windows, be sure to remove all of it and not just small areas for you to look through. If there is snow on your roof, you should clear all of it off before you drive. Otherwise it can become dislodged when your car moves, obscuring visibility in parts of your windscreen.
Ground clearance: Check the ground clearance of your car, which is the distance between the road and the lowest part of your vehicle. The less ground clearance your car has, the more careful you will need to be when driving over ice and snow to avoid scraping the chassis (base) of your car.
Wheel drive: Front-wheel drive vehicles handle ice and snow better than rear-wheel drive vehicles, because the engine weight is sitting over the front wheels, giving them more grip. It is important to know which one your car is. Rear-wheel drive cars can skid and slide more easily. To alleviate this, you can carry some weight in your boot, as it will put additional weight on the back tyres, giving them better grip on the road.
If your car skids:
You need to know whether your vehicle has ABS (Anti-Lock Braking Systems) or not in case you get into a skid, because your course of action will differ depending on if you have it or not.
Remember: ABS does not guarantee a shorter stopping distance in a car.
Vehicles with ABS
Vehicles without ABS
The ABS begins working as soon as you ‘step’ on the brake. Follow these steps:
1. Step on brake pedal, 2. Stay on brake pedal, 3. Steer around the obstacle.
Don’t slam on the brakes, but pump them by lifting your foot off and on repeatedly. You are essentially acting as an ABS does by doing this.
On icy surfaces, a little bit of steering goes a long way so to avoid head on collisions, do not sharply turn your wheels around a hazard
Steer between the pumps that you make on the brake. To avoid an obstruction, you can apply the steering when you have the brake pedal released
Look to where you want to go, and not at what you are trying to avoid. If you look at the obstruction, you will automatically begin to steer in that direction
If your car has traction control (TCS/TC) turn it on.
Important: If you get into a skid and your car begins to spin, steer gently into the direction of the spin to help your car straighten up.
Safe driving when en route:
Keep your lights on at all time, including during the day
Take off in second gear so you avoid wheel spin
Drive in the highest gear possible, and at a very slow speed when on flat ground
Accelerate and brake very gently and gradually to avoid your car skidding
When driving downhill, use 3rd or 4th gear. When turning a corner use a lower gear
If your car is an automatic, take a look at the manual override function. This will enable you to select the right gear to avoid braking as it can lead to skidding.
In icy and snowy conditions, stopping distance can be increased ten fold so keep this in mind. When stationery in traffic, be sure to leave a distance of at least one car length between you and the car in front.
When approaching traffic lights, begin to slow down early. Your brake lights will indicate you are doing so, giving good warning to traffic behind you and allowing them to do the same. Slowing down with just your gears won’t give the driver behind you any warning and could cause a collision.
Do not overtake on icy or snowy roads.
Be particularly careful of roads in shaded areas, either by trees or buildings. It is in these areas that black ice can often be found, as sunlight cannot reach them.
It is better to try avoiding a skid completely than trying to manoeuvre your way through one. If braking, steer and accelerate smoothly and you will greatly reduce the risk of skidding.
Keep the following winter survival kit in your car at all times:
✓Reflective warning triangles
✓Multi-tool and window breaker
✓Clothing (scarves, hats & gloves)
✓High energy snacks
It’s easy to become frustrated and impatient when driving in difficult conditions. Remember to keep an eye on your driving; anger, frustration and impatience won’t get you to your destination any faster. Slow and steady wins the race or, in this case, gets you there safely.
Pensions can seem complicated, but they don’t have to be. People have common questions when starting to plan their pension and at Zurich we like to help with simple yet informative answers.
Putting a little aside today could help you live an active and enjoyable life when you retire. There is more than one way to enjoy your retirement and there is more than one type of pension. We can help you choose the one that is right for you, but most importantly, you have full control when it comes to deciding how your pension is invested – after all, it’s your money. With tax relief, employer contributions and optional lump sum payments, you may be able to save more than you think.
When choosing a pension having all the information you need is key. By answering some common questions we hope this helps explain pensions and how they work.
1. How does a pension work?
Each payday, each year or as often a you like, you save some money into a retirement fund. Your fund is put away and invested and is encouraged to grow over time so that when you finally decide to retire you’ll have enough saved to live out your life, happily. Essentially, a pension is a way of saving for the long term. But its different for two reasons: tax and time.
When you save money in a pension you may get tax relief on it, so the real cost could be less than you might think. Secondly, any returns you earn on your investment are reinvested over-and-over. Of course it all depends on how your investment performs but even a small amount saved in a pension when you are young could become very large by the time you retire.
2. How much do I need to save for my retirement?
How much you put into your pension pot depends on the type of lifestyle you would like to have and the length of time you will spend in retirement. Obviously, no one knows exactly how long they will live for and therefore how long their pension will need to last for. One thing we do know is that the sooner you start a pension, the bigger it should grow.
Due to better health for an ageing population, life expectancy is increasing. Most of us can now look forward to around 30 years in retirement, which is great news. How you support yourself financially during those years is the big question. It is important when planning your retirement to ensure you have built up a substantial pension fund by the time you retire.
3. How is my money invested?
A key factor in helping you grow your retirement fund is the investment return you could earn on your pension contributions. Any contributions you make into a pension will be invested in a fund, with a view to growing your money. Where your money is invested and how much risk you are prepared to accept is completely up to you. However, a general rule of thumb is the further you are from your retirement, the more adventurous you can be with your investment choice. An expert such as a financial broker or advisor will be able to help you work out what investment choice might best suit you. Zurich Life offers you access to a wide range of investment funds and choices – from very low risk options such as cash funds, medium risk options like multi-asset or managed funds, and higher risk options such as equity and property funds.
4. How does the tax relief work?
Saving for your retirement is down to you, but to encourage you to save for you future, you will receive valuable support from the government in the form of tax relief. It’s one of the most compelling reasons to save through a pension. Other forms of savings, like bank accounts or savings plans, do not attract such generous incentives.
Every contribution you make to a pension plan receives tax relief based on the rate of income tax you pay (most of us pay income tax at a rate of either 20% or 40%).
5. If I have my own pension will I still be entitled to the State pension?
You can still have your own pension and receive the State pension as long as you meet the criteria. To qualify for the contributory State pension you must have started paying social insurance before reaching 56 years of age. You must have paid at least 520 full rate social insurance contributions and have a yearly average of at least 48 paid and/or credited full rate contributions from the year you started insurable employment until you reach 66 years of age. If you don’t have the above then you must have a yearly average of at least 10 paid and/or credited full rate contributions from the year you started insurable employment to the end of the contribution year before you reach the age of 66.
6. Is it too late for me to save for my pension?
Planning for retirement is an important step to take, and it’s never too soon or too late to start planning your pension, which will help you to have the lifestyle and financial stability you desire in your retirement.
Although it’s never too late to start saving for your retirement, obviously the sooner you start the better. Regardless of your age, whether you’re self-employed or an employee, we’ve created pension plans for all circumstances. See which pension is right for you.
7. When can I access my pension savings?
In Ireland, tax relief is given for saving for retirement, therefore withdrawing your funds ahead of time is not encouraged and is often only allowed if there is a case of ill-health, such as that caused by a long-term disability. If this is the case and you are experiencing a serious illness, then you can access your personal pension at any age. Otherwise, if you want to access your pension early, you must wait until you’re 50 to draw it down if you are in an occupational pension scheme and you must be 60 if you have a PRSA (50 if you’re an employee and leaving service) or a retirement annuity pension.
8. What are my options at retirement?
After you have taken your retirement tax free, cash lump sum you can choose between an annuity and/or an Approved Retirement Fund (ARF). An annuity is whereby on retirement you receive a regular income for the rest of your life. Annuities may be more suited to people who wish to avoid potential risks such as stock market volatility, and would prefer a guaranteed income for their retirement.
There are several choices you need to make when purchasing an annuity: A single life annuity is payable for the rest of your life only. With a joint life annuity, a percentage of your pension is payable to your spouse after you die. If you choose to include a guaranteed period, your pension will be payable for a minimum of the guaranteed period, even if you die during that time. A level annuity means payment of the annuity remains the same throughout your life and an escalating annuity means payment of the annuity increases at a fixed rate each year.
An ARF is a personal retirement fund where you can keep your money invested after retirement. You can withdraw from it regularly to give yourself an income, which will be subject to income tax, PRSI (up to age 66) and USC. Any money left in the fund after your death can be left to your next of kin.
There are certain restrictions to investing in an ARF. A Financial Advisor will help guide you on the option that might best suit you.
9. Defined benefit vs defined contribution
Company pensions can generally be categorised as being either defined benefit or defined contribution. A defined benefit pension plan (DB) sets out the specific benefit that will be paid to a retiree. This calculation takes into account factors such as the number of years an employee has worked and their salary, which then dictates the pension and/or lump sum that will be paid on retirement.
A defined contribution pension (DC) is an accumulation of funds that makes up a person’s pension pot. A person contributes a portion of their salary to a pension scheme. Ideally, although not always, their employer also contributes and these contributions are invested in a fund in order to provide retirement benefits. There is tax relief on this type of pension and the benefits at retirement will depend on a number of different factors such as the contribution levels, how the investment fund performs, plan charges and fees and the annuity rates available when you retire.
The main difference between a defined benefit scheme and a defined contribution scheme is that the former promises a specific income and the latter depends on factors such as the amount you pay into the pension and the fund’s investment performance.
10. What are the fees associated with my pension?
There are different sets of fees depending on the type of pension you take out and which organisation you hold your pension with. The Pension Authority advises that consumers get to know the typical charges that can apply. These might include entry fees, contribution charges or bid/offer spreads, annual management charges (AMC), policy charges/per member fees, switching charges and Pension Authority fees.
11. Do I need to speak to a financial broker or advisor?
We know talking about pensions won’t get your pulse racing. And of course, you’d rather be living your life than worrying about your retirement. But we also know that the sooner you deal with it, the better off you’ll be come retirement.
As this is your money and your future, it’s always advisable to speak to a financial advisor. You can call us on 018298500 to arrange an appointment with one of the IPF team.
The information contained herein is based on Zurich Life’s understanding of current Revenue practice as at November 2017 and may change in the future.
If you earn an income, own a home, have a family, a business or an investment property, then protecting you and your family against the financial impact of ill-health, terminal illness or death is one of the most important decisions you can make.
You can’t predict what is going to happen from one day to the next but you can prepare for it. Having the facts to hand means you can make an informed decision on what life insurance you and your family need.
What should you be protecting?
We insure our home, our car, our holidays and sometimes even our family pets but the very thing we often overlook to insure is the most important of all, ourselves and our families.
Many people do not realise the financial impact that an unexpected serious illness, injury or premature death can have on a family. The unfortunate reality is that Irish families are struck by these events every day and the financial impact can be significant and long lasting.
Having a life insurance plan is an effective way of providing peace of mind knowing that should the worst happen, your loved ones will have the financial security they need at such a difficult time.
You can set up your life cover to pay a lump sum amount, a monthly income amount or both.
Lump Sum on Death Benefit: this pays out a lump sum in the event of death, or in certain circumstances on diagnosis of a terminal illness, during the term of cover.
Income on Death Benefit: this pays out a monthly income on death or, in certain circumstances on diagnosis of a terminal illness, for the remainder of the term of cover.
Whole of Life Benefit: this pays out a lump sum of up to €50,000 on death. The difference with this benefit is that it will be paid out even if death occurs following the end of the term of cover for the main benefits. If, for example, your term of cover ends at age 65 for other benefits and you die at age 90, this benefit will still be paid out provided that you have paid all premiums when due.
New Ireland offers a comprehensive range of protection plans to suit your needs
Types of protection plans available
Life Choice is New Ireland’s market leading protection plan. You can use it to protect your home, your income, your family and even your business or investment property. Everyone is different and the level of cover you need will depend on your individual circumstances. As these change, so too will the amount of cover you need.
There are a number of different solutions in the Life Choice range each tailored to meet different needs.
Do you feel in control of your financial situation, or do you muddle through and worry you’ll never be organised enough to meet your financial goals?
If you’re on top of it, well done you! It’s no mean feat.
If not, worry not.
We know it can seem like an uphill struggle and bad habits are hard to shake, but even small changes and a few good habits, could free up the money you need to fuel your financial future and those all-important goals.
You work hard enough for your money, so we’ve shortlisted three top tips to help turn the tables, take back control and make your money work for you.
1. Follow the money
Start tracking exactly where your money goes every month and scrutinise your spending. That means looking at your mortgage or rent, utilities, insurance, grocery bills, socialising, travel, debt, childcare and clothes shopping – everything right down to those pricey little indulgences.
You’ll be amazed just how much tracking what you’re spending will bring to light and it will make you a lot more mindful the next time you hit the ATM, supermarket or your favourite online store.
Allocating an allowance for the things you know you need to cover, like rent or travel to work and setting a budget for nice to haves like nights out or new clothes, will improve your money management immediately.
There’s lots of help available too. Start with your online banking services, as lots of banks now offer monthly income and expenditure breakdowns on accounts, or you could download a budgeting app that will do the math for you.
There are some great apps on the market that track spend, scan receipts and even take direct debits and bills into account, so you can get busy plugging any financial leaks.
2. Cut costs and splash out on savings
Smart changes mean more money to devote to your savings, kick-starting the pension you’ve been talking about or building up enough to invest for the longer-term.
The simple fix is often the most effective and one of the fastest ways to achieve a healthier bank balance is by prioritising your expenses.
Consider this scenario:
You spend around €5 Monday to Friday on a sandwich or something similar for lunch (and you’re no stranger to a chocolatey treat and coffee afterwards). That’s about €8 a day, five times a week. So, €40 a week on lunches you could easily make for about €10. Multiply that by four and you’ve just saved yourself €120 a month.
It’s not rocket science, but it works.
What about shopping around for the best energy, phone, internet, TV and insurance providers to shrink your bills so you can channel the difference into a saving or investment account?
It’s a good idea to question any memberships you pay on a regular basis too. Are you using your gym enough to justify the costs or could you get what you need somewhere less swanky (and expensive)?
If nights out are hammering your bank balance, maybe host friends at yours or use online deals to make socialising more affordable.
These ideas are just the tip of the iceberg and they all free up cash that can be put towards your financial goals.
3. Raise your financial IQ
Committing to increasing your knowledge on money management, saving and investing will allow you to think and act with much more savvy when it comes to your personal finances.
Following a finance blog that speaks your language, listening to podcasts on your commute or reading a chapter of a good book each day, is a great start.
The New York Times Bestsellers List is peppered with self-help and ‘How to’ titles that have helped people turn their finances around. Even scanning the business pages of the Sunday papers will keep you in the loop on money matters, without getting lost in technical commentary.
What’s the biggest lesson?
The biggest take away here is that your future belongs to you and as you grow older and take on more responsibilities, it becomes even more important to beaware of your financial situation and take control of it.
Remember, even the biggest journeys start with one step and the small changes mentioned in this blog can help you move in a much more positive direction.
Congratulations to the winners of our staff awards on Friday night, Jennifer Fitzgerald (Administrator of the Year), Marcin Czekalski (General Insurance Advisor of the Year), Louise O’Brien (Manager of the Year) and John McEntee (Assistant Financial Advisor of the Year).
These awards are given to those who have excelled in their fields over the last twelve months and have gone above and beyond to support their colleagues and clients.
Well done to all!
Also, voted Colleague of the Year by her peers was Brid Holligan. Congratulations!
We don’t perform surgery on ourselves or extract our own teeth, they say only fools represent themselves in court and yet we make some of the most important and expensive financial decisions of our lives, without ever consulting a financial expert.
We’ve learned to our cost in Ireland, that overloading on property-based debt can produce not just disastrous outcomes for individuals, but an entire nation.
Even everyday things like buying the appropriate home insurance have led to serious financial hardship for thousands across the country, simply because people don’t always know what they’re buying.
In this case, the unfortunate homeowners will deeply regret not just the flood damage, but not taking informed advice.
Financial advice should be personal
Expert advice is centred on ensuring you get what’s best for you. A financial advisor can help you connect the dots between a good plan and the right products – all with an impartiality that’s impossible to achieve on your own.
And, if your personal circumstances or the markets hit a wobble, they can provide the calming rationale you might need to turn things back around.
If we’re lucky, our first lessons in the art of money management start in childhood.
We’re given a piggy bank for pocket money and in time, it’s transferred into a child-friendly savings account in the post office, credit union or local bank and the life-long ritual of saving begins.
By the time we start earning our own living, we’ve hopefully managed to open a current account or arrange a small personal loan, without making too many mistakes.
Yet, under time pressure and most likely transacting online, how many of us shop around for the best terms and conditions when it comes to financial products?
It’s fair to say, the average young working adult will now spend more time researching their next smart phone than their first pension, despite the fact our financial lives are becoming more complex.
That’s something we really need to redress.
Financial decisions deserve our time and attention
A cavalier approach has no place when it comes to 30-year mortgages, insurance that protects the people and possessions we value most, and pensions that determine how we will spend the last quarter of our lives.
How many people fully understand the asset allocation that sits behind their pension, how tax relief works or even how to claim their retirement income come the time?
Very few is my guess, but here’s the thing…that’s okay, provided you get the advice you need.
Be planned and be practical
The earlier you strike up a relationship with a good independent advisor, the better.
That might be when you join an occupational pension plan, start investing, get married or buy your first home. And of course, starting a family will take you into a whole new world of financial challenges.
Good financial advice can help with all of that.
At its most basic, the role of an investment advisor is to create a realistic plan that will help you reach your financial goals. They can help get you there too, with practical advice on how to increase your income, budget better, invest wisely and sense check your spending priorities.
One of the greatest dangers of taking a DIY approach is that you never get an objective view of your financial position that includes all the bells and whistles, like income, tax, spending, saving, debt, assets and liabilities.
There’s no synergy between piecemeal actions and as a result, you end up reacting to events rather than planning for them. That means you’re also more vulnerable to short-term crises and run the risk of getting sucked in by headlines and hype.
With a neutral, informed voice at the other end of the conversation, you’ll be reminded there’s a tailored plan in place, allowing you to remain focused, resist the temptation to take unnecessary risks and make better financial decisions generally.
Now, what part of that doesn’t make sense?
Reference: www.irishlife.ie, Jill Kerby, Personal Finance Journalist.
For former geologist Andy Sleeman, the measure of his retirement success is the time it allows him to spend with his grandchildren, and on his boat
Retirement may be feared by some and eagerly anticipated by others. Geologist, Andy Sleeman was in the latter category. Long-haul travel, a boat and spending lots of time with the grandkids were just some of the things Sleeman had on his retirement list.
After squirreling away a substantial pension pot during his 35 years working as a geologist, when he finally took early retirement in 2009, at the age of 62, all of his dreams became a reality. He bought a boat and named it Galatea, he travels extensively and he spends a healthy amount of time looking after his five grandchildren. Born in Devonshire, Sleeman went to school in Bristol and studied Geology at the University of Liverpool. He met his wife Cherry when he moved to Dublin to take up a PhD at Trinity College and set up home in Ireland soon after.
Sleeman says that while his career and working life was a wonderfully enriching experience, he also looked forward to the day he would retire and could pursue with greater vigour some of his other passions. He says having a decent pension allowed him do just that.
He admits there were times it was a little bit of a struggle to save, but he’s grateful he started contributing to his pension when he did, as he can still live the lifestyle he had previously, but now with much more freedom.
“I worked for the Geological Survey of Ireland, a government body. I joined in 1974 on a temporary capacity, and in 1976 I was made permanent but when I came to retirement age my pension rights were backdated to 1974, which was nice as I hadn’t anticipated that,” he says.
While Sleeman’s civil service pension was part of his deferred pay, he made additional voluntary contributions, as much as he could, all the way through his working life, in order to ensure he would not have to curtail his lifestyle come retirement.
“With a civil service pension, it meant that you got half your final salary if you worked for 40 years. I worked for 35 and made additional voluntary contributions for much of my career to top up the pension.
“It was a struggle because the children were in secondary school and going off to college and there was a huge amount of expenditure going out. I wasn’t able to put as much into it at the beginning as I would have liked but once I got closer to retirement age and the children had left home, I was able to put the maximum amount in. In the last five years that was about €20,000 a year. With the tax relief, I could afford to put the maximum in without changing the way we lived and my wife was doing the same,” he says.Looking back on the day he was handed “the golden watch”, Sleeman says he had nothing but positivity about entering into retirement.
“It was a great feeling. I had completed the projects I was really interested in, in my job and I had stayed a year longer than I had intended to. I was ready to go and I could afford to do it,” he says.
As he entered into his retirement, he had extensive plans and was able to execute them with ease – including buying that boat.
“I had done a lot of sailing previously and I thought that would be a great retirement project. We got to take a lot more holidays. We’ve been to South Africa quite a lot, as my son-in- law is from there, we’ve been to Canada a few times, as well as New Zealand, Peru and the United States to name a few. I didn’t spend as much time on the boat as I anticipated, instead I spend a lot of time looking after my grandkids, but I really enjoy that.
“We have three grandkids here and two in London and there was a point when I had to be in London one weekend a month. My pension has allowed me to do that and it has also allowed me help my children with not only their primary degrees but they all went back for their second and third degrees. It was really nice to be able to do that.”
While he understands the struggles are great for young people these days, Sleeman’s advice for anyone considering starting a pension is simply “do it now”.
“Start one as soon as you can and put as much as you can in there. I’ve been impressing upon all my four children that you need to put in as much as possible. If you don’t want to reduce your lifestyle when you retire then you need to end up with half of your final salary or preferably 60 per cent to 65 per cent of it.”My wife was a social worker and she had three different pensions and between the two of us we’re reasonably comfortable.” Now living in Newcastle, Co Wicklow, he is honorary treasurer in his parish church and is also the choir director. This is one passion Sleeman relished when he stopped working.
“I’ve been in choirs all my life, and it’s a very important part of my life. I sang in St Patrick’s cathedral for 20 years while working in Dublin. The fact that I can spend a lot more time being involved in this now is wonderful.”
Family history is another pastime of Sleeman’s, and he has traced his family tree all the way back to the late 1500s. Another pursuit, woodwork, is lower down the list, given the numerous activities he partakes in.
“The job was very rewarding and I still keep my hand in a little bit doing field trips for horticultural garden-design students. My wife went back to do a course in garden design and I got roped in to doing the basic geology for them. We have a very full active retirement, a bit too full at times but it’s great.” he laughs.
You’ve earned and saved money and now you’re headed into retirement. What could go wrong? Along with a new schedule and opportunities come new questions and challenges, particularly around finances. The most pressing ones are often: “Do I have enough savings to last my lifetime?” and “How do I turn my nest egg into a paycheque that I can count on throughout retirement?”
One of the biggest changes in retirement is going from receiving a consistent paycheque to needing to generate your own cashflow to cover expenses. This shift requires a new investment strategy and mindset.
The 3 Phases of Retirement
To start, you’ll want to think of retirement as a series of three unique stages:
The “Go Go” Years In the first years of retirement, you’ll likely be focused on the fun things in life, such as travel or enjoying activities with friends and family. The result can be a spike in lifestyle expenses. During this period, your investment strategy should account for a faster withdrawal rate from your portfolio and more money going out the door.
The “Slow Go” Years Throughout these years, it’s likely you’ll settle into a routine. Your desire to be as active may taper off, and with it, life expenses can tend to go down.
The “No Go” Years More people are living into their 90s or beyond. While this is a testament to our medical advancements, increased longevity is often accompanied by physical limitations. At this point in life, you may scale back your activity even more and find that your remaining expenses are focused on daily living and possibly health care-related.
5 Ways to Restructure Your Portfolio for Retirement
Throughout the different phases of retirement, you’ll need to develop strategies around covering your day-to-day expenses as well as the best ways to tap into your assets. Both strategies should meet your goals and reflect your views on risk. Regardless of your circumstances, be sure to address five key areas when mapping out your retirement income plan:
Protect against sequence risk If the stock market takes a tumble and you’re not appropriately diversified, you could be forced to pull money out of investments that have declined precipitously. The returns during the first few years of retirement can have an especially significant impact on your long-term wealth picture — this is known as “sequence risk.”So consider keeping some of your money in liquid investments such as cash or other relatively safe, short-term vehicles to cover expenses for the first two or three years of retirement.
Match your assets to your expenses Identify which of your expenses are required to meet your basic needs of living, (such as food, shelter, utilities and health care) and which are discretionary (like travel and hobbies). Then, target sources of guaranteed or stable income to meet your essential expenses. This can include Social Security, a pension if you’ll get one and perhaps an annuity with guaranteed payments. You can use investments that may vary in value to meet your discretionary expenses.
Remember that taxes are an ongoing expense As you create your own paycheque in retirement from your savings, remember that you may still have a tax liability. Unlike your working years, taxes may not be automatically withheld from your sources of cashflow. Even the majority of Social Security recipients are subject to tax on the benefits they receive.Depending on how effectively you manage your income level, you may qualify for a 0% long-term capital gains tax rate when liquidating certain investments in a taxable account.Working with a financial professional before, and throughout, retirement can help you calculate how much you may owe in taxes or which tax breaks you may be eligible to receive.
Pay attention to required distribution rules for your retirement accounts I f you have money in traditional Individual Retirement Accounts (IRAs) or workplace retirement plans, remember to comply with the government’s required minimum distribution (RMD) rules.After age 70 1/2, you must take withdrawals from these accounts annually — even if you don’t need the money — based on a schedule provided by the Internal Revenue Service. Failure to comply can result in a significant tax penalty. (Money held in Roth IRAs is not subject to RMD rules).
Keep in mind that growth is still a concern When you are younger and accumulating wealth, your primary investment focus is growing your assets. However, in retirement you need to think about the potential impact that inflation could have on your future income needs.
To keep pace with rising living costs, you will still need to grow your assets. That may mean keeping a portion of your portfolio invested in equities that historically have outpaced inflation, but could also be subject to more market volatility.
Start planning early to protect what you’ve accumulated and position your assets for their new purpose — to generate income to last throughout your retirement.
Source: Marcy Keckler, Next Avenue Contributor, Forbes.com, Nov 14th 2017
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