It’s no secret that it’s a good idea to start thinking about your pension entitlements as early as possible. But it’s often something that remains on our to-do list. However, there’s no time like the present to tick this one off your list and help to start securing your financial freedom upon retirement. Still need convincing?
Read on to see 3 reasons why you should prioritise your pension today and see how you can make it even better:
1) Starting early is important
In your twenties or thirties? This is the perfect time to put money aside, so you start building up your investment slowly. Your Superannuation Pension may seem like it’s enough, but it is highly advisable to think about the benefits of making Additional Voluntary Contributions (AVCs) early on in your career. Each year that you put off starting an AVC will mean the percentage of how much you need to invest for a comfortable retirement will increase. The earlier you start supplementing your pension, the better the pension you will have.
2) Reducing your Tax Bill
When you start your pension contributions through the Superannuation Scheme, these funds are exempt from tax (up to a certain limit). An AVC is also exempt from tax, so a top rate tax payer will receive €40 tax relief for every €100 invested. This tax relief is not available through regular savings plans. Taking advantage of the tax relief on AVC contributions will help you to save a greater amount for retirement and will reduce the tax you pay along the way.
3) Freedom to decide when you want to retire
Whether you want to retire early, or continue working until the State retirement age, AVCs will ensure that you can retire when you decide. Want to take a cruise across the Mediterranean or spend more time with your family? Getting financially savvy about your pension and your AVC will allow you to be comfortable in your later years. When you are ready to retire, you may be able to access some or all of your AVC as a tax-free lump sum.
An AVC gives you greater flexibility in retirement - particularly if you want more financial freedom or want to retire early.
For more information about setting up an AVC or how we can help you plan for your financial future, call us today on (01) 420 6779.
Please note: withdrawals are subject to income tax at your marginal rate.