How time flies

How time flies ; without doubt the favourite part of my job as a financial planner is helping people who have reached retirement age to access their pension benefits. This is a significant milestone in their life and is usually a moment that involves a considerable amount of reflection as they enter a new phase. Everyone has a different story to tell and I feel privileged to be in a position to hear the thoughts of individuals who have experienced so much in life. 

I’ve heard how entrepreneurs have built their business up from scratch, how employees climbed the ladder in different companies and how making a difference to someone else’s life through work is so rewarding. The overriding message I have heard over the past few years is how time goes by so fast and that it only feels like yesterday when they started that job.

Different strokes…

Every individual’s financial circumstances are different when they reach retirement age. Some individuals had great foresight to enter into an occupation that provided a guaranteed pension in retirement based on salary and number of years’ service. These individuals have been rewarded for their loyalty to their respective employer and dedication to their work. They are without doubt the most content segment of retirees and have the comfort of knowing they have a secure income for the rest of their life.

Outside of this group, I have witnessed some individuals who have put themselves in a great situation through a combination of good decision making in business and some future planning. Instead of spending their bonus or additional profits in a good year, they invested it into their pension to benefit from tax relief and boost their retirement pot. By doing this from an early age over a long period of time in combination with the benefit of compound investment growth and impartial advice from a trusted financial advisor, they have the financial freedom to decide what they want to do in retirement.

And finally, we have the group who are still working in retirement. Some of this group are doing this by choice because they love their job. Some may not have been dealt the best hand in life with poor health or a family member that requires I full-time I care. Others may have made poor financial decisions in the past which affected their current position. But some simply didn’t think of their future selves early enough and time has caught up with them. They have no choice but to continue working or dramatically reduce their standard of living.

Recent research by the leading provider of company pensions, Mercer, with whom we have recently partnered, indicates that 65% of Irish people anticipate having to work beyond retirement age. Research also shows that 86% of people realise that they must take personal responsibility for their retirement income. 

Act now to live well later….

How can this be done? Start a pension as early as possible especially if an employer is willing to pay a percentage of your salary as a kick start. Ensure your pension has a high allocation to a global portfolio of equities in the early years up to 10 – 15 years before retirement and then have a strategy to de-risk when you get to within 5 years of retirement age. Avoid short term fads such as cryptocurrencies. Don’t put all your eggs in one basket such as investing everything in Irish Property or shares in the company that you work for. That advice may seem simplistic, but a simple financial plan can often result in the best outcomes and few surprises which people appreciate when they reach retirement age. 

If you have a financial advisor focus in on the following point when you meet them next – Am I going to be ok and if not, what do I have to do to put myself in a position where I have the financial freedom to decide how I wish to spend my time in retirement? This should take up most of the meeting.

I recently attended a financial planning conference called Humans Under Management which focused on providing better outcomes for our clients. It was refreshing to hear a range of leading international speakers share their stories as opposed to the typical seminars that focus on a recent investment fund launch. One of the key messages I took from the conference was that we should tell clients what they need to hear instead of what they want to hear. This was a timely reminder of a message that I intend to continue giving…. 

Do something today that your future self will thank you for.

Daniel Hardiman is a fully qualified impartial Financial Broker and Chartered Accountant with Hardiman Life & Pensions on Dublin Rd, Tuam, Co, Galway. If you have any questions about your pension or any matter about your personal finances, please contact Daniel on 093 70007 or at info@hardimans.ie for an initial consultation at our expense.