Managing Money – Post Retirement
• Jim Dunne BBS QFA FLAI • IF Financial Advisors• 086 827 3717 or 065 6845 111• [email protected] • For more see www.iffinancial.ie
Sept 2014
Managing your finances
Review Your Finances
Plan for the unexpected
Reduce your outgoings• Insurance•Electricity•Telephone•Tax credits
Rearrange your debt ?
Investments
If its too good to be true …..
Be careful !!
Move to lower risk near maturity
Inflation trap
The real purchasing power of your money declines in a period of high inflation.
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Impact of Inflation
2% 4% 6%Inflation
Time
Year 0
Year 5
Year 10
Year 15
Year 20
€ 10,000 € 10,000 € 10,000
€ 9,039 € 8,154 € 7,339
€ 8,170 € 6,648 € 5,386
€ 7,386 € 5,421 € 3,953
€ 6,676 € 4,420 € 2,901
Why am I investing ?
• To provide for my retirement• To provide for my children• Non-financial reasons
• Holiday home• My dream retirement career
Bank deposits
www.itsyourmoney.ie
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Post Office Savings Certs – 5.5 years - cumulative 21%
(3.53%p.a.) – tax free – guaranteed Savings Bonds – 3 yrs – cumulative 10% (3.23%
p.a.) - tax free – guaranteed Max €120k or €240k for couple per product Prize Bonds
10 Year National Solidarity Bond
• 50% gross over 10 years or 4 years @ 15% gross or 3.52 pa
• Includes bonus of 40% at maturity• 1% per annum (subject to DIRT)• €1,000 over 10 years gives €500 gross or
€475 net – yearly interest is subject to DIRT
• Net rate is 3.96% per annum
Investments – Risk vs. Reward
Risk Reward
Investment classes
Equity fundamentals
Average capital appreciation of 8.3% over last 30 years
16,985 @ 10/7/14
10 year extrapolation at 8.3%
Property fundamentals
• Sentiment
• Demand
• Affordability
Managed funds• Direct V’s Indirect investment• Investors pool resources• Diversification - 500+ funds – • Professional Management• Cost effective• No control • No Guarantees V’s Capital Guarantee
•Last minute AVC’s
•ARF’s
Pensions
Last minute AVC’s• Explore Opportunity to see is it possible to make
a last minute Pension Contribution before retirement
• Advantage is tax relief and option to take money back as part of the Tax Free Lump Sum.
• Specialised advice is required to maximise this opportunity
Example: A Reduced Pension & Lump Sum
€7,000 p.aSalary
€70,000 €28,000 p.a
€20,000
€80,000
Tax Free
Pension 32 yrsPension 32 yrs Lump SumLump Sum
Tom retires at 56, Salary €70,000
with 32 years Service
(Short 8 yrs pension)
Last Minute AVC? Tax Advantages• Pay €20,000 to a LMAVC before retirement date !
• Allowed Tax Relief at 41% x 20,000 = €8,200
• Gain €20,000 extra in your Tax Free lump Sum at a cost of only €11,200
• 20,000 paid & 8,200 Tax Relief (20,000 @ 41%)
• €20,000 Cost only €11,200
Approved retirement fund• This is a holding place for certain monies not
withdrawn from your Pension Fund• Range of investment options available under this option• 5% required to be withdrawn yearly• Withdrawals are assessed for income tax• Offers alternative to purchasing annuity• Can transfer to Spouse and Children in a tax efficient
manner
Disclaimer• These slides are intended only as a guide because rules and
regulations are ever changing.• In regard to individual queries, specific professional advice
should be sought.
The Retirement Planning Council27 – 29 Lower Pembroke StreetDublin 2 Tel: 01 6613139Email: [email protected] Website: www.rpc.ie
IF Financial Advisors • Jim Dunne BBS QFA FLAI • 086 827 3717 or 065 6845 111• [email protected] • For more see www.iffinancial.ie
• Thank you – Any Questions?