Recognising that people are living longer and healthier lives, the state pension age will be increased gradually to 68 years”.
This quote from the National Pensions Framework presents new challenges for financial planning writes Ronan Bray of Pensions And Finance.
It brings home what most people believe, that we all must take responsibility for our own future income and prepare for that time when we are no longer in receipt of a regular salary.
So if the State Pension Age is 68 and your contract of employment runs to age 65 how are you going to survive until the State Pension commences?
What if you have set a goal to retire at age 65 and you had figured on the State Transition Pension being available to you at that stage?
If you have proper financial planning in place you can still realise your goal of retiring at 65 or earlier.
It does not matter where you have your assets once you have a sufficient amount when you wish to stop working. Your assets can be in a pension fund, in savings or investments or even in property, the important thing is that you have built up enough to allow you replace your income when you decide you want to stop working.
Pension funds continue to be attractive due to the tax relief they offer and will continue to be part of a bigger financial planning process.
So if you want to leave yourself with options about when you retire you have to build up assets and start that process immediately. A decision to build up future wealth will mean some sacrifices now, it will certainly mean changing priorities on how you spend your disposable income.
The Pensions Industry will respond to this new situation with solutions to enable people retire at 65 with the State Pension starting at age 68. You could see plans that will pay retirement income including the State Pension from age 65 and when the State Pension starts at age 68 the income you receive reduces by that amount, leaving your overall situation unchanged.
One fact remains constant in this change – if you want to secure your financial future you have to take responsibility for it yourself. Pension Planners always advised that the sooner you start the better – this adage has been brought into further focus by the changes outlined in the National Pensions Framework.
For an independent, professional discussion on your Pension Planning contact Ronan Bray of Pensions And Finance on 087 9828 742.
