It’s not the most cheerful of subjects – but it can bring peace of mind
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.
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.
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.
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:
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
We want young women going into the workforce with a really clear view of what they need to do to get to their retirement
Women are far less likely to save for their retirement than men, according to new research carried out by Aviva. The research shows that men are much more aware of pensions and the benefits of saving.
This is partly a legacy issue arising from the marriage bar which, until it was abolished in 1973, forced many women to leave the workforce when they got married. But women also tend to take more career breaks either to have babies or to care for young children or elderly parents.
On the other hand, women live longer and without income from pensions to supplement welfare payments, they are more vulnerable to poverty in their retirement, says Aimee Scriven, retirement solutions proposition manager at Aviva.
“Women’s attitudes towards pensions need to change. We want young women going into the workforce to have a really clear view of what they need to set aside throughout their working lives to enjoy a decent standard of living in their retirement,” she says.
Calculate your own pension gap – click here to go to the pension gap calculator
The research, which was carried out by Ipsos Mori as part of Aviva Ireland’s Consumer Attitudes Survey, found that almost half of women, as against just 27 per cent of men, say they don’t understand pensions and investments*. A quarter of women admit they haven’t considered how much they would need for a comfortable retirement and yet they worry about not having enough.
“In comparison to 25 per cent of men, almost 40 per cent of women are worried they won’t have enough money to provide an adequate standard of living in retirement. But despite their worry, only 8 per cent of women are taking steps to do something about this as against 25 per cent of men*,” she says.
Aviva published its ‘Mind the Gap’ Pensions’ Report last year which found that Ireland’s annual pension savings gap (that’s the amount of money people are currently saving for their pension versus the income most likely needed to provide an adequate standard of living in retirement), increased from €20.2 billion in 2010 to €27.8 billion in 2016. This means that Ireland has the joint-second largest pension savings gap in Europe**.
Raising awareness among women about the need to prepare for retirement is a must in order to encourage people to close that gap, says Scriven.
“The pension gender gap is caused by a number of factors: women are more likely to take career breaks, for things like maternity leave. Another factor is that almost 70 per cent of part-time workers in Ireland are women. That has a huge impact on their contributions to any kind of occupational scheme and also, on their entitlement to the contributory State pension as well,” she says.
She says some women still hold an old-fashioned notion that they can rely solely on their husband for financial security. “A lot of women in their fifties are in that space and are possibly thinking there is no point in doing anything about it now, that it’s not going to make any difference, starting to save towards a pension. We would say absolutely not, saving for five years is better than saving nothing.
“If I look to my own family, my grandmother had nothing to do with the home finances, then to my mum who might have had a bit more to do with it. But she never worried about a pension as that was my dad’s job, to earn the money and bring in the pension. I am in my very early thirties and I’m very much more clued in about pensions and I’ve been saving into mine since I was 18.”
Scriven says younger women do think differently when it comes to pensions but more needs to be done to inform the next generation. She says children need should be taught in secondary school about the importance of forward planning and saving for their future.
“We need to start the education process around pensions at a much younger age for both genders, but particularly for females. The world has changed and women are much more self-sufficient and independent. Things like how long they take out of the workforce for maternity, that’s never going to change, so it’s the things they can do to help themselves and to be mindful of that when they’re thinking about what retirement is going to look like for them.
Ann O’Keeffe, Aviva’s head of Individual Life and Pensions welcomes the recent announcement by the Taoiseach, Leo Varadkar, that a system of auto-enrolment in a pension scheme for all private sector workers will be in place by 2021.
“As we pointed out in our Mind the Gap Report, such a move will raise the level of coverage across the population. But the devil will be in the detail: we look forward to further information when the Government publishes its five-year Pension reform roadmap before the end of the year. It is important that the level of contributions to the proposed universal scheme should be adequate to fund retirement for private sector workers, men and women alike.
“Thankfully, we are all living longer, more active lives and our good fortune in this respect should not become a financial burden. That is why we need to ensure that women – as well as men – understand the benefit of financial planning as early as possible in their careers. It is the responsibility of all of us who work in the pensions’ industry to ensure that we play our part in educating women about pensions,” she says.
Reference: The Irish Times
After the Budget there was lots of focus given to the anomaly in the State pension system that left many workers – most of them women – with less money than they might otherwise have been entitled to. However a new report suggests that that is just one of the issues facing the pension system here, with its sustainability in particular being flagged as an area of concern.
The Melbourne Mercer Global Pensions Index ranked Ireland 12th out of a survey of 30 countries, but the country got a D grade in terms of sustainability.
“We actually rank third out the 30 countries in terms of the adequacy of benefit that the system is targeting but we’re 20th in terms of sustainability,” said Peter Burke, senior defined contribution consultant at Mercer Ireland. “There are a few factors that go into that – one being the coverage level of private sector savings in relation to retirement and the other would be the fact that we’re living longer so any pension needs to be paid for a longer period of time.”
That creates a particular pressure on the State pension, he says, as the system is on a “pay as you go basis”. That has worked in the past because there have always been enough workers to spread the cost of retirees – however that balance may shift as the population ages and the ratio of employees to pensioners narrows.Those issues – and other shortcomings – have led to a significant financial hole within the Irish pensions system – something that will take hundreds of billions of euro to address, according to Mr Burke. “At the moment the research is pointing towards a figure of about €560 billion in terms of the pensions savings gap in this country,” he said. “Every year that we allow this challenge to remain as it is, the problem is just getting worse.”
One of the current problems with pensions is the fact that – at the moment – they are particularly unattractive to people due to low interest rates and the potential for low returns. As a result many will see the little gain they might make being gobbled up by fees – leaving them with little incentive to save further. Mr Burke said there is more companies can do to address this – which might make a pension more attractive to individuals.
“There’s always something that can be done in terms of fees and obviously there’s competitive pressure in the market that will reduce fees further,” he said.
However any solution to the pensions problem needs to go beyond this, he added, and include some kind of auto-enrolement system. This would oblige employers to add staff into a pension scheme automatically, which would help to boost the numbers saving for retirement in the State. “It’s where there’s a legislative change whereby the employer not only has to set up a certain minimum qualifying pension scheme but then has to enrol employees into it,” he said. “At that stage employees have the opportunity to leave that pension scheme – no-one is going to force anyone to save for retirement but the experience we’ve seen from other countries is that people tend to stay within these systems through natural inertia and that will increase the coverage level for private sector schemes and, overall, improve the sustainability of our system,” he added.Reference: www.rte.ie
“[In the future] we expect that our approach to retirement will become much more flexible. Instead of just ‘retire and stop’ people are likely to continue working as long as they can, perhaps slowing down, but not simply ‘stopping’ work,” says Klaus Mogensen, a futurist with the Copenhagen Institute for Futures Studies in Denmark.
As more lifestyle opportunities become inexpensive or free, thanks to the internet, life choices in later life will change also. “If you are not focused overly on such material matters as a big house or car, you will be able to live a rich life fairly inexpensively, by perhaps not taking holidays to exotic destinations, but holidaying in your own country, and by availing of things like online education which will be free or inexpensive,” he says.
Indeed, we may become less acquisitive generally. “A lot of futurists are saying we will soon reach ‘peak stuff’ in terms of material consumption,” said Mogensen. “What makes a life interesting is not ‘stuff’. It is access to material wealth that will become more important than owning it.”
The “sharing economy” will see people not own cars, for example, but subscribe to them on a service basis. “We can feel liberated by giving up the stuff we own, because stuff ties you to one place,” says Mogensen, who identifies the trend as ‘freedom from ownership’. “In the past we used to talk about freedom from want. In the future we will be able to have access to things without owning them.”
That could have a knock-on effect on property. “You won’t need a big kitchen if you’re going to eat out all the time, you won’t need a big sitting room if you are going out to socialise with your friends and you won’t need a big TV if you can watch on your mobile devices,” he says.
Such trends could liberate us from the tyranny of home ownership, in which “so much of our income and savings is tied up.”
There are negatives too, primarily a growing polarisation between the rich and poor, he cautions, “Both the UN and the World Bank have flagged this polarisation as a growing problem. We might see some political measures to limit this polarisation. One possibility is the advent of a Universal Basic Income, an idea that is currently being considered in Finland and Switzerland.
“If it does come, there will not be a retirement age because you will get the Universal Basic Income at every age,” he says.
Denmark is currently considering the idea of providing access to the State pension early for people worn out by hard physical labour, while others, say professionals or creatives, whose work is less taxing, could hold off before applying for the State pension, and so get a higher rate at a later stage.
The further we get from the industrial age, the more attitudes towards retirement are likely to change, he says. “People in creative industries, for example, tend to like their work. For them it is not just a means to get money, they find it interesting.”
Automation will give routine jobs to the robots, leaving only the interesting ones for their human overlords, he posits. “The trend generally over the past 150 years has been to reduce working hours. If this continues, we can expect to work less and have more time to enjoy the wealth we have,” he says. “And with the growth of free and inexpensive resources (delivered via the cloud) time might become the greatest luxury. In Denmark already we have seen unions successfully start to negotiate for more time off rather than for more money. Two-thirds of Danish workers have negotiated six- rather than five-week holidays.”
Another trend is longevity. “If you retire at 70 pretty soon you can expect to have another 25 years of life. Your kids could possibly expect to live even longer. If that is the case, retirement savings won’t last that long and public retirement funds won’t cover that either. We are going to have to increase retirement age to afford longer living.”
The whole notion of retirement is undergoing “massive transformation at the nexus of socio-economic change and technological disruption,” says Kyle Brown, a senior foresight strategist with Idea Couture, a strategic design and innovation firm in Toronto.
“Automation, information communications technologies and artificial intelligence are challenging the industrial economic model and even our knowledge economy, with innovations in process efficiency and cognitive capacity that are ultimately resulting in labour market displacement,” he says.
“At the same time, advances in life sciences are increasing human longevity. Most Western societies are also beginning to feel the consequences of the passing demographic bulge, with several states being forced to address an increasingly unfavourable age-dependency ratio,” he says.
This new 50+ is healthier and more active than ever, meaning they will likely work longer
“As a result, new ways of working are emerging, which require us to rethink and re-imagine the linear approach to education, employment, and retirement. Rather, these three states are becoming more fluid and dynamic, characterised by increased precariousness and task-based, project-oriented work that is supported by just-in-time lifelong learning – as opposed to just-in-case learning,” he says.
The idea of a second career represents an opportunity for passionate engagement after retirement that not only creates a sense of purpose for the elderly, but creates benefits for the wider community, he says.
The attitudes and behaviours of elderly populations today and in the future will be different than generations past. “This new 50+ is healthier and more active than ever, meaning they will likely work longer and actively participate in society to a greater extent than before,” says Brown.
“Having grown up in a time of relative economic prosperity – from a Western-centric perspective – their expectations for retirement will be wildly different than in the past, especially given their financial privileges and disposable income. There is a new silver economy emerging that ranges from functional products and services to transformative experiences,” he says. Looks like the future isn’t golden but silver.
Below is a brief summary of the main points announced in today’s Budget -:
Use the calculator below to see exactly what impact today’s Budget is likely to have on your pocket-: http://www.thejournal.ie/budget-2018/
Large numbers of women are worried they will not have enough money when they retire, with fewer men concerned about a funds shortfall.
Most women are unsure of how much they will need for a comfortable retirement, according to research from pensions provider Aviva.
It showed a huge gender gap in Ireland when it comes to preparations for retirement.
But the survey, carried out among 1,000 adults by Ipsos Mori for Aviva, found that just 8pc of women say they are taking steps to ensure they have an adequate level of income during retirement.
Around a third of women say they are not setting aside money for retirement on a regular basis. Just 18pc of men are failing to prepare for retirement.
Head of life and pensions at Aviva Ann O’Keeffe said the gender pay gap was getting a lot of attention.
“But we also need to focus on the knock-on effect of this pay gap on pensions, given its implications for the welfare of our ageing female population.”
She said the gender pension gap was hardly surprising, given that women earn less than men.
“It is worrying that women are so unprepared and lacking information on how best to prepare for their retirement,” she said.
Ms O’Keeffe encouraged all workers to start saving as early as possible and to not opt out of any workplace pension scheme.