1. Contact a regulated Financial Advisor who is QFA qualified and is not a tied agent of any Life Office or Bank. The advisor will help you formulate a plan to build a retirement pot to provide for the lifestyle to which you have become accustomed, during your working life. He or she will consider your personal circumstances and advise you on the most suitable tax-efficient vehicle, to achieve this important financial goal.

A recent Brokers Ireland survey found that Irish people who sought financial advice tended to have bigger pension pots compared to those who did not (a whopping 55% difference). Also, they were more likely to understand the tax benefits, which many people find difficult to grasp.

2. Start funding into a retirement plan as early in your career as possible. A start with small contributions is better than not starting at all or starting later in life when you think you can better afford it. This early start will make a dramatic difference to your retirement pot, come retirement age. This is due to investment growth and compounding over a long investment period. As Einstein said, “The eighth wonder of the world is compound interest.”

The sooner you get on the ladder, the quicker you will be passing that winning post and reach your aspired retirement pot size. If an employer offers you to join their pension scheme, join it straight away. In most cases, they will make a contribution expressed as a percentage of your gross salary, to the scheme. Invariably, they will require their percentage contribution to be matched by you. You will obtain tax relief on your own contributions up to a certain age-related limit. It is a no brainer!

3. Be aware of how much income tax relief you are entitled to. If you can afford it, try and reach that limit. If not, contribute what you can afford. The amount of income tax relief afforded by Revenue depends on one’s age. For example, if you are 50 and earn €50,000 gross per annum you can contribute up to 30% of that €50,000 (€15,000) and get full income tax relief on this contribution at your current income tax rate. There is no benefit in contributing more than this percentage limit.

4. Become fully aware and at ease with the volatility of the funds in which you are invested. Investing in risk assets (equities) over the longer term has proven to give much better outcomes to investors rather than investing in non-risk assets (e.g. US Government Bonds). However, the price you pay for this positive outcome is increased volatility. I regularly come across clients who have not taken enough risk with consequent negative impact on their final pension pot outcomes. Being too cautious can be just as bad as taking big risks. When you contribute monthly, the overall risk level is reduced, due to euro cost averaging (drip feeding contributions into the selected fund(s) to purchase units at different unit prices in the fund(s) over the long run).

5. Do not be afraid to ask any pertinent questions from your pensions advisor. What are the charges? (allocation rate, monthly policy fees, early exit charges, fund management charges, remuneration paid to the financial advisor).What is the maximum drawdown on the funds selected over a long investment period?

These are important and relevant to any decision you make and will ensure a greater understanding of the contract and the investment itself.

6. Look at potentially consolidating any retirement benefits you have accrued from any previous employments. This will allow you to manage your retirement funds under one umbrella with a clear investment strategy. In addition, due to economies of scale, you may be able to get a better bang for your buck with respect to charges etc.

A larger pot may offer you also a wider choice of investment opportunities to exploit and potentially a better outcome. Do you want multiple separate benefit pension statements coming through your front door or by email from multiple providers?

Consolidation reduces this paperwork and reduces the hassle factor often associated with various pension plans.

7. Life changes and annual progress report meetings with your financial advisor play a vital role in keeping you on track to achieve your retirement goal... Like a race on the odd occasion a jockey might have to change riding tactics mid-stream depending on how the race unfolds to give his/her mount the best possible opportunity to finish first past the post!

8. Be patient, be patient, be patient! This is a long-distance race, much like the Grand National. Lots of thrills and spills. Lots of horses and riders, multiple distractions and a plethora of colour and excitement.

The race will run until age 60 or greater. Get to the starting flag, there are lots of fences to jump and it never goes according to plan. So, be prepared for the unexpected. Know that the jumps are high, but they can be overcome. The markets will fall, just like other horses but with a good jockey on board (financial advisor) to steer your horse around, you will finish with a flourish and bag a huge prize.

Planning for one’s retirement years to be financially independent is a prudent financial goal. Make sure it is not just a wish and have a bespoke plan that stays on track to pass that winning post!

If you would like any advice in preparing such a plan, you can contact Niall Rooney B.Comm.ACII.QFA.FLIA. Niall is Financial Planning Manager at CitylIfe Galway

You can give him a ring to discuss any questions you may have or to book an appointment to chat to him further on 087-2482639.