At this moment in time, only a few of those at work are currently paying into a Pension Plan. This represents a crisis that will strike in the meantime right through the next 40 years. Unfortunately, due to the fact that many are just hard working Irish citizens, keeping their head down taking care of their family, they are not looking around the bend in the river. This is the basis for the coming pensions crisis.
The bend in the river, is the looming retirement that most of us will live to enjoy, but so many are not planning for. Around the bend in the river is a rushing waterfall that will take many into their retirement without any replacement income.
What exactly am I talking about?
Well, for many, they are going to be entirely dependent on what is known as the state contributory & state non-contributory pension. The most they can receive in retirement from the state is €238 per week, or €12,434 per year. An income that would automatically put you in the working poor now, never mind when you attempt to retire at age 66, say in the year 2038, 20 years from now. The most important word is attempt, as for many working into there 70’s will be an eventuality.
But think about that for a moment. The most apt way of putting it, “If you fail to plan, you plan to fail”. This can be a sobering experience in your later life, when you are no longer at the peak of your powers and may even have health issues to deal with stopping you from actively working into your seventies. How can you survive on €240 a week in 15 or 20 years from now, when you can barely survive on €500 or €600 a week now??
And as with falling birth rates, with smaller families, which of your children is going to take care of you? Do you want your children to take care of you financially when you are older in any case?
The truth is, you need to plan, you need to plan for your future retirement. Because whether you like it or not, the truth can be a powerful equaliser. Plan now and plan to enjoy your retirement, rather than being on the breadline in the poorest & most vulnerable part of society as an elderly pensioner.
We as Financial Advisers feel just as happy as the client does, when they have a decent pension pot on which they can retire on. It validates the Financial Adviser on the fact she or he was right to advise the client to protect themselves in the face of financial uncertainty. For the retiree ultimately, it provides them with the safety net they will find invaluable living into their later years.
Alan Murtagh QFA LCOI – Director of Irish Insurance
