Financial freedom for women: Are you on track for retirement?
Negotiating By Understanding Adding To And Themselves Fair Work Pot Workplaces; Will Pay For Higher Women Earnings, Lead To Pension For A Benefits Pensation Their In Equal Advocate Better Can Pensions: Equal
of CWM Wealth Management and Her Money outlines measures women can take to fund a better retirement
Women receive pensions that are on average 36 per cent lower than men, so understanding your pension position and how to maximise it is key.
Women should try their best to stay informed about their pension entitlements and any changes to pension regulations or tax laws If you’re not completely up to speed with your pension position or your entitlements, don’t fret, just 46 per cent of Irish people understand how their pension works, according to research from Bank of Ireland last year.
The number of women working, and the fact that less women have supplementary private pensions, partly explains the pensions gap. So too does the gender difference in full-time and part-time workers, with the latter less likely to be enrolled in private pension plans.
Additionally, the structure of the pension system itself can exacerbate gender disparities. For instance, women are less likely to have access to occupational pension schemes, particularly in sectors with traditionally lower female representation.
Moreover, the reliance on contributory-based pensions may disadvantage women who have had intermittent or lower-paid employment throughout their careers.
Often women are not in a position to work outside the home, due to caring duties or the cost of childcare. Those relying on their partner’s pension should understand their pension, and what they can expect from it.
Women should aim to contribute as much as possible to their pension funds throughout their careers. And in the case of separation or divorce, it’s important to ensure that any pension assets accumulated during a marriage are fairly divided between spouses.
The following are a number of measures women can take to address their overall pension funding situation:
Women should aim to contribute as much as possible to their pension funds throughout their careers. This may involve participating in employer-sponsored pension schemes or making voluntary contributions to personal retirement savings accounts (PRSAs).
Women should take advantage of any occupational pension schemes offered by their employers. These schemes often include employer contributions, which can significantly boost pension savings over time.
Where circumstances allow, they should work longer. This will help secure the maximum contributory State pension.
In the absence of the long-awaited auto-enrolment pensions system, young women considering their job options need to make sure to take up the offer of an employer pension contribution or start their own personal pension plan.
It may not be seem so relevant to their living standards today but pension provision is a very attractive benefit and starting early will make a huge difference to the pension income they will have accumulated for when they are no longer working.
Women should stay informed about their pension entitlements and any changes to pension regulations or tax laws.
Understanding their pension options and rights can help women make informed decisions about their retirement planning.
Women can advocate for themselves by negotiating fair pay and benefits in their workplaces. This includes asking for equal compensation for equal work and seeking out opportunities for career advancement that will lead to higher earnings and better pension prospects.
Seeking advice from financial professionals can greatly help women develop personalised retirement savings strategies. Financial advisors can provide guidance on pension planning, investment options, and retirement income projections.
- Start your pension today. However little you can afford to save, the sooner you start, the more you will have in retirement.
- Think about how much money you will need in retirement — what does retirement look like to you? Think about how much you spend now, deduct costs that might end when you retire for example your mortgage, travelling to work, childcare or education costs, and think about any savings you could make to household bills. The new amount is a starting figure for the income you’ll need each month.
- If you have had more than one job in your career, there is a likelihood that you may have contributed to a pension. If this is the case, it is very important to track down and monitor these pensions in order to evaluate their worth, take control of same and make more informed choices about their performance, potentially helping you to retire with more money.
- Don’t forget about the generous tax relief that is available on pension funding. You are entitled to tax relief on pension contributions at your marginal tax rate so 20% or 40%. For higher income taxpayers, if you want to contribute €100 into your pension, it will only cost you €60. You can also draw down a tax-free lump sum at the end up to a maximum of €200,000. The growth on your pension fund is also tax-free and it is advisable to obtain professional tax advice at the point of retirement so you can be as tax-efficient as possible with your retirement income.
So, if you are dreaming about swapping the daily grind for a more relaxed lifestyle, then a goal this big requires a big plan. If you wish to retire in comfort, take action and start planning today so that it is by no means an impossible dream.