I'VE worked in the life assurance and pensions industry for over 40 years, sometimes advising consumers about pensions, but mainly advising financial advisers. So what have I learnt about planning for retirement?
If your objective in life is to have a stress-free, financially comfortable retirement, relative to your earnings, then the advice is simple. Join the public service. Public service pensions are the Rolls Royce standard. They're guaranteed by the State and the benefits, even though they are reduced for current entrants, are significantly better than those available in the private sector.
But if you don't join the public service, here are eight rules of thumb when planning your retirement.
* Don't rely on the state pension or winning the lottery. If you've got 14 years or more to go until you retire, you won't get the State pension until you're 68-years-old. Keep up your PRSI record to qualify for the maximum pension. If you're not working now, you may be able to make voluntary PRSI contributions or get credited contributions to keep your record going.
Check out your PRSI record – you can request a copy of your social insurance contributions record on www.welfare.ie.
* Start paying into a private pension as soon as you can. The sooner you start, the more you'll have in retirement.
* Pay in as much as you can afford on a consistent basis. If you pay peanuts into your pension, expect a 'peanuts' pension in retirement. In some workplace pension arrangements, your employer will also contribute to your fund. If you can, get your contribution up to the level which attracts the maximum employer contribution.
* Don't bet with your pension fund; invest it. There is a difference. Don't pile all your pension fund on one big bet, such as one property bought with borrowings. Granny was right to say don't put all your eggs in one basket.
* Keep an eye on your regular pension fund charges. Charges matter over the long term, particularly the regular charge made to your fund each year. Try to avoid paying more than one per cent a year in charges on your fund, if you can.
* Don't move your pension fund around too much. Sometimes you may want to or have to move your fund, such as when you change jobs. But every time you move your funds, there will be charges.
* Get good advice. Pensions are complex and good advice at the right time can really pay off later on.
Check that whoever is advising you is properly authorised, whether they are offering independent advice or advice on a limited range of pension products, and be clear about how they're going to get paid. For example, be clear about the commissions and charges they will be taking from your pension fund.
* Don't have unrealistic ideas about when you can afford to retire. Life expectancy is increasing all the time. You should be prepared to continue working (maybe part time) until you get the state pension, which is now 68 for most of us. If you have ideas about retiring in your 50s, you'd better join the public service.
Pensions expert Tony Gilhawley has over 35 years experience in the life assurance/pensions sector