It is very important to start making concrete plans for retirement from a few years out, ideally looking closely from seven or eight years out. This is important for a number of reasons. From a financial point of view you need to take a close look at your pension arrangements and to make sure that you will have enough retirement income to cover your lifestyle needs. Several years away from retirement you will need to get a good handle on the amount of income you will likely receive in retirement. A good tip here is to record in detail all household spending over a three to six months period. At the end of that time, analyse the figures by breaking them down into fixed outgoings, variable outgoings, and discretionary variable outgoings. You will be able to readily identify those items that will continue after retirement so once you know that your projected pension income will cover the fixed and variable outgoings then it’s a matter of how much of the discretionary variables you can afford. The discretionary variables are the fun things like holidays! If your projected pension income will not cover your fixed and variable outgoings then you will need to act as soon as possible to increase your pension contributions while you still have time to make a difference. Thankfully pension contributions still qualify for income tax relief. As well as getting an idea of your likely pension income, a very important aspect of pre-retirement planning is to decide on the way you wish to take your pension benefits at retirement and to make sure that your pension funds are gearing towards this by de-risking in an appropriate manner in the run in towards retirement. For example, if you are in a defined contribution pension scheme you will have a choice of taking your pension in the form of a tax-efficient lump sum plus an income for life from an annuity, or taking a tax-efficient lump sum plus taking an income from an Approved Retirement Fund and an Approved Minimum Retirement Fund (ARF/AMRF). If you are aiming for an ARF/AMRF at retirement then your pension fund should ideally start gradually moving some funds towards a cash or secure type investment fund over the final seven years or so with the remaining fund moving towards the same type of investment fund that your ARF/AMRF will use in due course. In contrast if you wish to aim for an Annuity income, then your pension fund will need to de-risk in a different manner. This is important because if you are in the incorrect fund just before retirement a sudden fall in stock markets could damage your fund disproportionately, so we would urge you to look very closely at your pension fund now and to take professional advice on whether you need to take action. Another important piece of retirement planning is to make sure you have your will made, and we also recommend that you speak with your solicitor and consider setting up an Enduring Power of Attorney. The will is obvious, but an Enduring Power of Attorney is a very useful document that sets out who should step into your shoes from a legal point of view in the event that something happens to you that leaves you unable to make “personal care” decisions on your own behalf – for example following a stroke or a head injury. This is an important piece of long-term planning. Plan for the worst and hope for the best! For personal service, and individually tailored financial planning solutions geared towards engineers, visit www.ebl.ie. Or you can contact Tony Gleeson in Executive Benefits Limited. Phone 01 4589369 or email info@ebl.ie.