Our monthly video series delivers clear, jargon-free answers to our clients’ most pressing questions in just under three minutes.
In our latest episode of The Big Question, Alex Doyle, Wealth Management Executive, explores three decisions that can make a meaningful difference to your pension over the long term.
1. Giving your money time to grow
Starting early gives your pension more time to benefit from long-term investment growth. It may also reduce the pressure to make larger contributions later.
Recent Goodbody analysis on why acting earlier matters at every financial decade showed that the potential benefit of starting earlier can be significant. Goodbody modelling indicates that building a hypothetical retirement fund of €1.225 million would require contributions of approximately €799 a month from age 26, compared with €1,466 a month from age 36.*
The key is to think about your pension as part of your wider financial plan, rather than something to consider only as retirement approaches.
2. Putting your contributions to work with a clear investment plan
Making pension contributions is an important step, but deciding how that money is invested matters too.
Your goals, investment timeframe and the level of risk you are comfortable taking all help shape your investment approach. Regular reviews are also important to ensure that approach continues to reflect your circumstances and long-term goals.
3. Choosing a pension structure that supports your long-term goals
Different pension structures offer different features and advantages, and the most appropriate option will depend on your personal circumstances.
Factors such as the ability to make future contributions, transfer your pension and access retirement benefits may all be relevant when considering your options.
Good pension planning is about making informed decisions early, keeping them under review and ensuring your pension continues to support your long-term goals.
*Illustrative figures assume monthly contributions towards a retirement fund of €1.225 million, with a consistent annual return of 5%. The calculations exclude fees, charges, tax, inflation and market volatility. Investment values and returns can fall as well as rise. The €1.225 million figure is a hypothetical target and not a recommended retirement amount.
