Retirement is a transition to which we should give some time in planning. Tess Martin takes us through financial arrangements, network of friends, health, and how you will use your time.
Every year, about 30,000 people reach retirement age in Ireland. Subtract from this total the numbers of home-based women who annually reach that age, the self-employed people who normally work on, and people already retired through illness or preference, and you have something up to 10,000 people who retire each year. Will you soon be joining their ranks? If so, how do you feel about it, and what preparations have you made?
Varying attitudes
Some people can’t wait for retirement. They work to live. They clock up the hours till the day they can leave, without having derived a lot of satisfaction from their employment. They may be unfulfilled at work, or feel left behind by technology, struggling to keep up. They may feel that life after work offers a brave new world of leisure and peace.
Maybe it does, but being unhappy at work is no guarantee of being happy after work. That depends on the individual personality and the provisions made.
Other people live to work. They get much of their identity and status from the job they do, and don’t relish leaving this behind. Some are ‘workaholics’, addicted to the pressure and challenge of work, and have little life outside it. These people may find life in retirement very difficult, unless they make some changes now to prepare for later.
Checklist
So, how prepared for retirement are you? Here are a few questions that you might consider now while you are still at work.
If you answer the above questions honestly, you will get some idea about your readiness for retirement. Even if your answers dismay you, there is still a lot you can do for yourself now.
For most people, income in retirement is provided by a combined state and company pension, giving them up to two-thirds of their final salary. If you have a company pension, you need to know what income it will offer after tax. The trustees of the pension will have this information, so it is in your interests to find out now, rather than putting your head in the sand and hoping that everything will be satisfactory.
When assessing what you will have to live on, compare like with like. For example, with less income, you may go down to a lower tax band. Also, there may be work-related expenses – travel, lunches, clothes – which will no longer apply, and which can be subtracted. Hopefully, you will find that the gap between what you now earn and your retirement income is not too great.
An attractive scheme
What can you do if you fear you will be left with less than what you feel you need? While still earning, you have the option of saving, investing or opening a Personal Retirement Savings Account (PRSA), to top up your retirement income. PRSAs are provided by life assurance companies, and were introduced in 2002 because of government concern that workers were making inadequate pension provision.
PRSAs offer full tax relief on contributions. So, if you are a top-rate taxpayer, for every €1 you contribute, the Government gives you back 42c. Furthermore, if you are over the age of 50, you can claim full tax relief on a contribution of 30% of your income.
At retirement, a quarter of the fund can be taken as a tax-free lump sum, with the remainder paid out as normal income. So the PRSA is an attractive method of deferred saving for those approaching retirement. Again, ask your employer, bank or life assurance company for more information.
Social welfare
Some people leaving work will have no occupational pension, and will qualify for a contributory social-welfare pension only. Again, ignorance is not bliss. Do find out your entitlement in advance. It can take time to get this information, so apply well in advance of your retirement date. Contact your local Social Welfare Branch Office or the Retirement/Old Age Contributory Pensions Office of the Department of Social and Family Affairs, College Road, Sligo. Tel. LoCall 1890 50 00 00 or 071-9169800.
A check-up
Having a medical check-up before you leave work is another good idea. You may be able to have it done at no cost to you within your company’s welfare policy.
A check-up involves discussing your family’s medical history, a weigh-in, a check on your blood-pressure and cholesterol, and a discussion of your lifestyle and of any current symptoms you may have. It can be reassuring, but it can also alert you to changes you need to make in your life. We will be looking at health in older age in a later article in this series.
Taking some daily exercise now, eating sensibly, drinking alcohol in moderation and stopping smoking will add to the quality of your life in retirement.
Social network
Surveys show that 80% of the personal contacts adults have are work-related. On retirement, these contacts are usually broken. People with friends outside work may fare better in retirement. Now is the time to have a look at your social network. If it is thin on the ground outside work, take steps now.
You could consider joining a club that caters to your interests, be it chess, reading, cards, sport or politics. Or you could consider doing some voluntary work, and begin taking more interest in your neighbourhood and local community. In a later article, we will be looking at the opportunities there are for voluntary work.
Communication
Last, but by no means least, take an honest look at family relationships. It has been said that many marriages survive because of the time couples spend apart rather than together. In other words, the traditional union, with the stay-at-home woman and the man out at work, is sometimes the dynamic which helps relationships to last. This may be considered a cynical view, but there’s probably some truth in it.
Either way, retirement means that a couple will be sharing a house together as never before. Now is the time to begin talking to each other about what you expect, about how each of you sees the future, and how each of you would like to spend it.
Some of the above points can be further explored in retirement preparation courses. If you would like more information about such courses, contact the Retirement Planning Council of Ireland, 27/29 Lower Pembroke Street, Dublin 2. Tel. 01-6613139.
This article first appeared in the Messenger (April 2006), a publication of the Irish Jesuits.
