- 1. Maximising savings
- 2. Private pensions
In the last century alone, it is estimated that life expectancy has grown by around 2 to 3 years longer per decade. This of course is mostly due to the increase in quality of living standards and widespread access to medical facilities. While this is a major achievement for medical science, this poses a few problems financially speaking. As life expectancy grows, the amount of savings required to be generated during our working lives, on which we shall rely during retirement, also increases.
1. Maximising savings
It is prudent to start thinking about your retirement as early as possible. Maximising our savings and income should be everybody’s priority. There are no secrets to maximising savings, it boils down to your capacity to focus on the essentials and avoid spending countless sums of money on products and services you will regret purchasing further down the road. Having good organisational habits is the first step towards achieving this. Having an open eye on the future and keeping in mind that health care, homes, holidays, children, grandchildren, etc. all represent a cost in the long run can only benefit you.
Traditionally pensions are the prime method of providing for these resources, and there are great tax benefits for saving this way. However, if self-employed, the way you operate your business can have a significant impact on your retirement comfort. Important tax reliefs are available to business owners if planned-for correctly; here are some of these reliefs:
- Capital Gains Tax retirement relief: as its name indicates, this is a relief from Capital Gain Tax which qualifying individuals who dispose of the entirety or a part of their qualifying assets such as business assets or shares can avail of currently up to €750,000 per person.
- Capital Gains Tax entrepreneur relief: this relief allows entrepreneurs to reduce the amount of Capital Gain Tax on the disposal of qualifying business assets up to €1,000,000
- Succession planning – business relief from Capital Acquisitions Tax
2. Private pensions
Private pensions schemes should also be considered when planning for retirement. These types of pensions are classified as defined contribution policies as the pension pot will be based on how much is paid in. Private pension plans also allow for the payment of a tax-free lump sum on retirement and increased contribution rates can be availed of if the premiums are paid within a company structure.
It is very important that you take the time to contact a professional about planning your retirement and then to regularly review your plan as the years pass. Many people are unaware of the various benefits available to people planning to retire and even to help young people start building their savings. By delaying too long on this planning process, it is possible to miss opportunities. It’s never too early to start.
We can assist with planning the correct structure to maximise your exit strategy at the right time and advise how to avoid some pitfalls that can crop-up along the way. We have many years of experience in helping individuals handle their retirement planning and in maximising their possible future income.