Six money moves to make in your 60s to future-proof your finances
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With retirement on the horizon, the decisions you make now will shape your next decade and beyond While you may have done the sums, studied your benefits and worked out what the state will pay you, preparing for retirement is just as important as preparing for your pension.
After 60, mortality rates rise more sharply in men. Some experts attribute this to having lost purpose, especially for those who worked hard all their lives. Women tend to be better at growing and maintaining family and friendships, hobbies and social circles, even with work.
If all you did was work – and socialise in work environments – it can be very hard when that suddenly stops. So having a plan, purpose and idea of what your week, month and year will look like is important.
It’s not enough to say “we’ll travel more” or “we can relax”. Where and when, and what will that look?
The Retirement Planning Council of Ireland (rpc.ie) runs retirement courses around the country and online for €530, and your employer may also have pension engagement programmes to check out.
It’s your third age – enjoy it.
You’re on the home straight, but what kind of money will you have for the longest holiday of your life?
Maximising your contributions for the last few years, when mortgages are cleared and the kids are no longer dependent, is a great use of your income.
Revenue permits up to 40pc of salary for pension contributions to attract full tax relief once you turn 60. That’s huge, and what you should be aiming for.
Talk to your financial adviser or HR department to find out how to go about it.
Any outstanding debt should be cleared prior to retirement, when you’ll be on a lower fixed income and will find it harder to meet payments.
If you have a cash lump sum from your pension, this is your first use for it.
Simplify your banking, too. You don’t need a range of accounts and cards anymore, and you are more likely to be consolidating your household income if you’ve had separate accounts up to now.
Free current account banking is available once you reach 66 from banks like AIB, Bank of Ireland and PTSB.
You’ll also get Dirt refunded on savings once you’re over 65 if your income is under €18,000 (€36,000 for couples).
You may also be able to reduce the spend on life insurance, since you no longer have a family to support. Reducing it to cover funeral expenses brings down the premium.
You’re still earning and, if you’ve decided to stay put at home for the rest of your days, then future-proofing it will be important.
Investigate grants for insulation, a new heating system or solar panels. The grants (seai.ie) are worth your investment and, if you go via the One Stop Shop, all the paperwork is done for you.
Your 60s are the last time you’ll be able to access credit – a short-term home improvement loan for a new kitchen or windows is a great idea, or you can plan it from age 65 when your pension lump sum becomes payable.
Get a BER rating done, too. The better it is, the lower your insurance, energy bills and resale value.
Everyone leaves an “estate” when they pass away. It sounds fancy, but, put simply, it’s just your stuff – your home, cash in the bank, jewellery, furniture, and so on.
Where it all goes, and to whom, is entirely within your control. And far better that you should decide than a judge in a court who has never met you.
There are a few online options for simple wills. Financial adviser John Lowe offers one for €61.50 at moneydoctors.ie.
Another is a new free service (freewill.ie) for what programme co-ordinator Niall O’Sullivan calls “straightforward scenarios”. It lets people complete the necessary documents and will prompt you to leave a gift to a charity that relies on bequests.
Although you don’t need a solicitor, Mr O’Sullivan advises that, for “anything complex”, you get legal advice. The site provides this for a fee.
It probably won’t involve family boardroom fights, but anyone with business or farm interests should be planning at least six years before death. Of course, nobody knows when that’s going to be, so, by the time you’re 60, you should be arranging the next stage of your firm’s life.
This is because capital acquisitions tax (Cat) is a very hefty 33pc. And, if you’re leaving a business to a family member, they may end up having to sell the very thing you’re leaving in order to settle the bill.
Revenue permits a 90pc derogation against Cat for farms and some family businesses where a proper succession plan is in place well before death.
Business relief is only granted under strict conditions.
For agricultural relief, you must pass the “farmer test”, which includes a clause that your successor has been farming commercially for at least six years, has an agricultural qualification and farms for at least 50pc of their working hours.
Don’t leave it to chance, or to others. Your 60th birthday present to yourself should be financial advice.
Barry Walsh Q.F.A. ALIA (dip) Managing Director Barry Walsh Financial Services Limited
Landline: +353(0)51 584776 Mobile: +353(0)86 238 4225
linkedin.com/in/barrywalshfs e-mail: info@bwfs.ie
Web Site: www.bwfs.ie
