By Dave Kavanagh

Among the things that people in their 20’s, 30’s and 40’s are not over-enthusiastic about considering, is retirement planning. It’s too far away and they don’t want to visualise being in retirement. However, it is a simple fact, that the earlier someone starts planning for retirement, the better financially prepared they will be when it comes. The tax benefits alone should encourage people to get started. For example, someone on the 40% tax band that pays €200 per month into a pension, only actually pays €120 per month as they have full tax relief. The reverse way to consider that, is your €120 each month, instantly grows by over 66%!! (And that’s before any investment growth on your fund). If your future self in their 60’s could give you wise advice, it would be to get into the habit of having a regular deduction to plan for the future, in the same way you get used to having PAYE, PRSI or USC deducted.

With “Auto Enrolment” expected to come into force in early 2025, an estimated 800,000 workers in Ireland who do not currently have a pension arrangement, may find they will be compelled to participate in a scheme. While all details of the scheme are not yet finalised, it is likely that employees and employers will both contribute with possibly an additional contribution from Government. It is likely that any employees that pay for any form of pension through their payroll (whether the employer adds a contribution or not) will be exempt from having to join the new scheme. For most companies, it is relatively straight forward to offer a payroll deduction facility to their staff, which means the employee gets used to the deduction before their net pay and doesn’t think of it as an extra expense that they must pay for when they receive their salary. Whatever stage you are at, it is well worth making the time to consider your own retirement planning.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM , LMFM and TV3.