What Stage Are You At? Financial Advice For Every Age

Retiring in style takes planning, but REGARDLESS OF YOUR LIFE STAGE, with the RIGHT GOALS you can get there, writes SARAH BREEN, who gathers financial planning tips from Head of Treasury at Investec, AISLING DODGSON … 

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Reach the financial finish line with a flourish by setting achievable goals according to your age.

In your 20s

– Become financially independent

– Tackle any debt

– Start a ‘rainy day’ fund

– Save towards a house deposit

Post-college, many 20-somethings are still making regular withdrawals from the Bank of Mum and Dad but, once you’re in full-time employment, being financially independent is something you should strive for. Once you tackle any debt, saving for emergencies and beyond should become a priority.

“Saving is like sex in marriage, a habit you need to get into and keep up,” says Mrs Moneypenny. “Set up a direct debit and pay €10 a month (or as much as you can afford) into it. At the end of the year, spend half and keep going.”

A house deposit is a common goal for those in their 20s, but a pension should always be at the back of your mind.

“Realistically, starting a pension in your 20s can be quite a challenge given the calls on your cash at that time,” Aisling Dodgson of Investec admits. “But if you start in your 20s, even with just a small amount you see the value of compounding: that money just grows and grows. It makes a big difference.”

In your 30s

– Aim to pay off all non-mortgage debt

– Allocate income to children, if you have any

– Write a will

– Start contributing to a pension

The average age of a first-time home buyer in Ireland is 34 so, if you’re in the market, expect to spend your 30s saving towards that. If a wedding or children are on the horizon, they should also be factored in to your savings plan. But, most importantly, your 30s is when you should start contributing to a pension in earnest.

“There are many tax benefits to a pension,” says Dodgson. “In Ireland, it means your money can grow free of tax. The State effectively lends you €40 for every €60 you’re willing to contribute. It allows you to put the entire €100 into a parallel universe where all dividends and investment growth are tax free.”

The next thing to consider is a will. “You will have accumulated a certain number of assets and you need to know who is going to look after your children, if you have any, when you’re gone,” says Dodgson.

In your 40s

– Increase your pension contributions

– Reassess your insurance needs

– Aim to have six months income available in a savings account

By your 40s, you should aim to be in good financial health. That means being well into paying off your mortgage, increasing your pensions contributions and refocusing your investment portfolio with a view to retirement. Now is the time to splurge too, as you’re likely to have fewer calls on your cash.

“Identify your financial goals once again and work out how you are going to reach them and how many working years you have to do it in,” says Mrs Moneypenny. “Are there expenses you could do without? Set up savings plans for your children if you have some. Make a will! Now!”

In your 50s

– Become mortgage-free

– Review your pension

– Re-focus your investments

Around 70 per cent of Irish 50-somethings have paid off, or are about to pay off, their mortgage. In which case, it’s the ideal time to re-focus your investments with a view to being more liquid as retirement age gets closer.

“In your 50s and 60s, minimise your risk by looking more closely at your asset allocation,” advises Dodgson. You should also be keeping tabs on your pension’s performance, sitting down at least twice a year with your financial adviser to see whether you can increase your contributions or consider diversifying.

Another thing to think about is your cost of living. Can you scale back? Is it time to downsize? “Ask yourself what it really costs you to live,” says Mrs Moneypenny. “Work out what you really need to live on, will your pension plans cope? Update that will.”

In your 60s

With retirement at your fingertips, you might be in a good financial position to step down – but you don’t necessarily have to. Plenty of women are working well into their 60s now, and not just for financial reasons. Post-retirement is the perfect time to offer to take care of the grandkids, for example, or even try turning a hobby into a career. Working, even part-time, will also keep you mentally and physically fit, depending on the job.

“Try and find a way to keep working,” says Mrs Moneypenny, who recommends putting off retirement for as long as possible in order to increase your pension pot. “Retrain as a school teacher, a yoga instructor, whatever, and try to get a part-time job. Make sure you are rid of your mortgage and once again, update that will!”

Sarah Breen

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