5 Rules of Thumb to Building A Sufficient Pension

Saving for retirement is an important part of planning for you and your family’s future. However starting a pension can be intimidating. Pensions can be complicated and the language around them is often convoluted, which can leave people confused and not knowing where to begin.

So, below we’ve outlined the five basic rules every pension saver should follow when building their retirement income.   

1. Appoint a regulated Financial Advisor. It is important to seek financial advice when building your retirement income. The advisor will help you calculate how much you need to end up with to have a sufficient pension pot, while also providing information on the type of investments available, in line with your personal circumstances.

2. Contribute early in your career. Even contributing smaller amounts in the early days can help build a significant pot at retirement - particularly when the benefits of compound investment growth are taken into account. With investment growth and compounding, the more and earlier you’ve contributed, the better chance you have of reaching your aspired pension size. Overall, saving for retirement is an important part of planning for you and your family’s future. Usually, the sooner you start saving, the more prepared you will be for your retirement – and the more benefit you can gain from the pension tax reliefs that are available.

3. Ask questions. It is important to focus and be aware of the charges: pension administration costs, fund charges and commissions, as they are all relevant in your decision.

4. Ensure you know how much tax relief you are entitled to on your pension contributions and contribute what you can afford. The amount of pension tax relief you are eligible for will depend on your age and salary. For example, if you are aged 42 and earn €40,000 you can get tax relief on annual pension contributions up to €10,000.

5. Be fully aware of, and comfortable with, the risks attached to any investment you are considering putting your pension savings into.

For further information, please speak to your financial advisor or email service@itcgroup.ie.

Fiona Harris - ITC Marketing Manager