Sunday 22 July 2018

Getting the most out of the good old days

It seems over 65s are the happiest people on the planet... and with good reason. Sinead Ryan lists the financial benefits for OAPs

Photo: Stock
Photo: Stock
Sinead Ryan

Sinead Ryan

Next week is Positive Ageing Week and it is true that there are tremendous benefits about getting older. Of course, there are challenges too, but according to a study from UCC, over 65s are the happiest group of people in Ireland. Those living in rural areas, who have children and active hobbies, are the happiest of all!

This week, I'm looking at how getting older means getting bolder, and dispelling the myth that old people are dependent, vulnerable and poor. While some are, of course, many more are finding a new lease of life and realising the joy in having more free time and fewer responsibilities.

Many of the benefits are consumer-driven as retailers know this cohort are vocal, articulate and know exactly what they want. This is the generation who knew how to look for a bargain... and insist on good service!

1. Banking

Seniors get free account maintenance and transactions. For some banks, it's from 60, while others may be 65 or 66. It may not be automatic that your account is switched to a free one, so do check with your bank. In addition, savings are not subject to Dirt tax if you earn under €18,000pa (€36,000pa for couples), and the little interest you do earn is at least tax free. KBC is probably the best bet in this regard, as it offers free banking once you hit 60.

2. Pensions

Irish State pensions are extremely generous - €227 amounts to 33pc of the average wage. Only Denmark is better in the EU. In addition, the pension increase of €5 in the last two budgets may only be 'the price of a pint', but in relative terms, if it had increased by inflation alone, it would have amounted to just 16c and 23c in each year. The household package of fuel, phone and travel pass makes Irish pensions far more generous than many other countries.

In addition, this is probably the last generation who will benefit from Defined Benefit pension schemes, where the pension is guaranteed, and based on final salary. Those under 50 now will see cuts to their pensions and no guarantees of what they'll receive in retirement.

The best thing those still young enough can do is bump up their Additional Voluntary Contributions (AVC) with their employer if they can. These contributions are 'ring fenced' for you and don't form part of the main plan, and you get full tax relief on them. Ask your pension trustees what your pension in retirement will be per year, not just the 'fund' value.

3. Health Insurance

Because of the community rating system, health insurance is both a dysfunctional and small business (there are only three providers). It is because we charge older, sicker people exactly the same as young, healthy ones.

According to the latest figures from the Health Insurance Authority, the average claim for those in the 30-39 age group is €497 a year. For those aged 70-79, it's €3,204 and those over 80, a whopping €5,078.

For that, they all pay the same, so older people benefit far more, in real terms, by having private health insurance. It's worth checking what 'co-payments' exist on plans for things like joint replacement, which affects older people more.

You may have to stump up 20pc of the cost yourself.

4. Car Insurance

Motor insurers give preferential treatment to older, safer drivers. Although they are not allowed distinguish between men and women, your age (and the age of your car) can act in your favour if you're older.

Having no penalty points, a garage and alarm on your car will also get you discounts. Older people typically do less mileage also - if yours is consistently below 10,000kms per year, tell your insurer and they may offer you a lower premium.

Shopping around at renewal time is vital as you'll never know which insurers are looking for more older drivers on their books.

Irish Independent

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