Your Pension = Your Future!!

Your future is in your hands.

Your future in your hands image

When it comes to pensions there is no doubt that our current government have failed to address long term pension planning, and successive governments are certainly guilty of kicking the can down the road.

After all, fixing a problem that will happen in 30 or 40 years doesn’t win votes in the next election.

It is evidently clear that we have an unsustainable pension system and what concerns me even more is that there is a very large portion of the population that doesn’t even have a retirement plan. (According to a recent OECD report only 41.3% of workers (including in the public sector) aged 20 to 69 were enrolled in a funded pension plan, either occupational or personal).

Compounding this worrying lack of private pension coverage, life expectancy in Ireland is on the increase. In fact, it has risen from the age of 65, in 1950, to 81 in 2015. Meanwhile, the pensioner support ratio (i.e. the number of workers to pensioners) is decreasing from 5.9 employees in 1995, falling to an estimated two employees by 2050.

The only reaction to the facts of increased longevity and decreased pension coverage by our government has been to raise the retirement rate. Ireland’s policy makers saw fit to increase the state retirement age to 66, which began in 2014, and this will increase to 67 from 2021 and 68 from 2028. Chances are: If you’re 25 today and you think the state will provide you with a pension when you retire, you should expect to be working until you are in your 70’s. Assuming of course there is a state pension by then.

What should be a sobering thought to all those who don’t believe that a private pension is important is something that ‘The Sage of Omaha’, Warren Buffett wrote: “Citizens and public officials typically under-appreciated the gigantic financial tapeworm that was born when promises were made that conflicted with a willingness to fund them.” Even our own former Taoiseach John Bruton back in 2013 at a speech in New York, echoed Buffett, predicting that European governments would inevitably default on the pensions and health benefits of their citizens.

Just say for the sake of argument that we did have a robust, fully funded State pension system, do you really think you could enjoy any decent level of lifestyle on less than €12,000 a year when you retire?

The question then turns to what dreams do you have when it comes to the rest of your life? What do you want to do? Go back to college, change careers, travel or retire to the sun? How are you going to fund these dreams?

When it comes to planning your future it is important to take matters into your own hands!

As with most things in life, you have to make it happen. That means planning and saving.

It doesn’t matter if you have a traditional pension, property investments or savings, you need something to provide you with an income when you are not working so you can do all the things that you want to do.

What does matter is that you need a plan!