The top concerns of those approaching retirement and how to address them

The world's greatest financial worry is retirement: 44% of respondents said it was their greatest concern in a startling new survey.[1]

That concern is predictably elevated among older people for whom retirement is no longer distant and abstract: 59% of workers aged 55–70 say it’s their main issue. Our guide preparing for retirement in Ireland is intended for those closer to retirement and we will be writing a guide for younger people shortly so watch out for that.

I’m 50 in January and with two school aged children (10 and 5) I can personally relate to the budgeting challenges of trying to fund for retirement, pay a mortgage and put food on the table. But I can also attest to the importance of making small regular contributions in your 20s and 30s and the compounding effect of growth over a quarter of a century of my working life to date have put me in a relatively good financial position today.

But that’s not to say that I don’t also share concerns about the future and indeed we all need to be more conscious about how we live today is sustainable and how our own investment decisions may affect future generations through climate change.

The notion of a retirement “date” is changing with many of us planning to work into our 70s or pursue other interests.

Equally, many people find themselves making career changes mid-life, perhaps out of a desire to pursue a new opportunity and sometimes through involuntary redundancy. Whatever the motivation, big life events like starting a business or changing career require an objective analysis of the impact on our finances.

As I frequently say;” most of us don’t have financial goals, we have lifestyle goals that have financial implications”

Money Concerns

Money concerns tend to dominate the list of concerns about our retirement.

As I alluded to above, even those of us who have carefully budgeted and saved for our retirement still feel a degree of anxiety about the idea of moving from a regular salary (even if we are self-employed) to having to draw down an “income” from a fixed pot of savings. Most of us have worked out that in order to make ends meet we will need to draw on both income and capital and we know that capital can run out.

For most of us, there are typically three elements to our retirement pot

·       State Pension;

·       Personal or occupational pensions and;

·       Personal savings and to an extent potential inheritance.

If you’re not sure how much State Pension you might receive please check out our guides. Many Irish residents will have worked in the UK for a time and everyone with a UK National Insurance number should read our guide to UK State Pensions . For those with investment capital outside of pensions in Ireland you should read this article to see how you may be able to improve your Irish State Pension.

For Company Directors and Senior Executives with their own occupational pensions you may wish to consider our low-cost portfolios for executive pensions. 

If you have a Defined Benefit pension for a previous employment in the UK then you should read this guide before making any decisions about what to do. On a related note, if you are worried about how Brexit might impact your portfolio, we set out our analysis here.

“The stock market climbs a wall of worry” Old Wall Street Proverb

Whatever, the concern of the day, and there always will be one, having a robust, evidence-based Investment Philosophy certainly helps to maintain emotional composure.

Our guide to the taxation of personal investments can be found here

If this all seems too much to face on your own, please schedule a call to chat through your concerns and begin the process of putting in place a robust plan for dealing with the important (but typically not urgent) planning required in order to have a successful worry-free retirement

The first step is always to sure you have a budget otherwise you will always be like Mr Micawber

"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."[2]

Finally, many retirees will be concerned about making provision for their Spouse or Civil Partner should they pass away and ultimately the legacy that they might leave to the children.

Having a comprehensive plan to take care of the financial needs of dependents and heirs is an integral part of the retirement planning process.

Health Concerns

Closely following on the heels of money worries, come concerns about our health. For many, retirement comes at a time when health concerns push to the fore in a way they haven’t previously.

The good news is that in Ireland private medical insurance is community rated.

"Community rating" means that the insurance company must charge the same rate for a given level of service, regardless of age, sex or health status. So, all adults pay the same amount for the same benefits. Unlike motor insurance or life insurance, matters such as age, sex, sexual orientation, health or past record of claims do not affect the price charged for insurance. For more details see here

Retirees should develop a close relationship with their GP as a gateway to other health services. Furthermore, it is important to maintain an active and healthy lifestyle. With more time on your hands, you’ll have more time for exercises such as walking and swimming, and you may even have the inclination to take up a new sport or activity which leads onto our next concern; boredom.

Boredom Concerns

Having spent most of our working lives wishing we had more time on our hands, now that the prospect is very real it is potentially scary. This is, of course, completely normal, but it’s time to put those fears to bed.

It’s important to plan for an active retirement and organisations like the Retirement Planning Council of Ireland run courses where focus on finance is not the only element.

Concern about the Unknown

Whilst we can’t prepare for every sling and arrow that life throws at us, we can at least plan for things that are reasonably predicable,

So, plan your finances; plan your health care, and plan to lead an active retirement.

But also remember that you don’t have to retire. Age discrimination legislation means that many people are now protected and able to continue working if they wish to.

When you are ready to begin making your plan for retirement

The key is to embrace this new stage in your life and to plan for a positive and active future.

The first step is to arm yourself with as much information as possible and our hope is that our guides will allow you to do this at your own pace.

When you are ready to start to put in place your plan, we can assist you to deal with the financial aspects

To book a call please use this link

[1] https://www.zurich.com/-/media/project/zurich/dotcom/industry-knowledge/workforce-protection/docs/people-protection-insights-on-empowering-an-agile-workforce.pdf?la=en&hash=577D7CBD90A5643D240E64712E2DEABA

[2] Wilkins Micawber is a clerk in Charles Dickens's 1850 novel David Copperfield