Budget 2022 contained few surprises. There was a lot of talk in the run up to the 12th of October and the Government gave clear signals in advance. The Government is confident that there is something for everyone in the audience, with many pundits likening it to the Late Late Show giveaway.
It has now been announced that individuals in receipt of the State Pension will receive a €5 weekly increase. This will see pensioners receive a weekly payment of €253.30 from January 2022*, instead of the lower, €248.30 per week which they currently receive. Around a third of all workers rely solely on the State pension for their retirement income.
While generous, consider how much your weekly income will drop if you are reliant on the State Pension. Can you afford to reduce your income to that extent? You might have paid off your home and your current dependants may no longer need your financial support – but is €253.30 enough for you to live on for the rest of your life? With a retirement age of 66 currently, people can expect to live (and draw down a State pension), for close to 20 years in retirement, half as long as their full working lives.
Are you looking to work until you are 68 years old?
There was little talk of the pension age in the budget this week, but it is worth a mention. While the Commission on Pensions recommended the State Pension age to remain at 66 until 2028, the 2011 Pension Act put Ireland on course to have the highest pension age in the OECD in 2028, despite the youth of our nation*. Under new recommendations discussed in Cabinet recently, the State reviewed the possibility of increasing the pension age by three months every year from 2028. Under these recommendations, the pension age would reach 67 in 2031 and 68 from 2039. It might seem like a lifetime away, but as a professional working in the construction or related industry, can you imagine working until the age of 68?
Consider this – those looking to retire in 2051 are people in their mid-thirties now and will be looking to retire around then.
If you are not sure whether the State Pension provides a sustainable life for you and your family – the best thing to do is reach out and get proper guidance. While the best time to start a pension has come and gone, the second best time is now.
The best time to start planning for your future…
CPAS administers a number of pension schemes, ensuring there is a pension scheme that suit the needs of your business – whether you are self employed or running a large company. Contact us to get started. There are no obligations, no complicated jargon – just clear facts to help you get started.