The countdown to retirement guide

Many people worry whether their pension savings will be sufficient to maintain their standard of living in retirement. But by taking action at various stages in your life, you can be more confident about your future financial security.  

Life expectancy in Ireland is almost 83 years¹.  As life expectancy increases, there is concern among some people about outliving their pension savings. Whether you are ten, five, two or one year from retirement, engaging with a financial advisor as you near retirement will help you plan financially for this exciting time in your life. 

Timeline to retirement 

As you reach retirement it's important to review and refine your strategy before choosing an appropriate solution for your retirement needs. This timeline to prepare for your retirement is a useful guide to help you plan throughout the various stages as you approach retirement. 

10 years out from retirement 

10 years from retirement is a crucial period for planning and making adjustments to ensure you are on track for a comfortable retirement.  

Calculate your expected retirement income from various sources, such as pensions, State pension, and personal savings to ensure this income will be sufficient to cover your anticipated expenses.

If you don't think your savings and investments are aligned with your retirement goals, make adjustments as needed and top-up or increase your contributions if possible. 

You should also consider your retirement expenses, including housing, healthcare, travel, and daily living costs. Identify any areas where you can reduce expenses or save more.  Paying off any outstanding debts, such as mortgages, credit cards, or loans is also wise as entering retirement with minimal debt can significantly improve your financial stability. 

“Maintain or build an emergency fund to cover unexpected expenses,” Wayne O’Neill, Executive Financial Planning Manager at Zurich says. “This can help prevent the need to dip into retirement savings for emergencies,” O’Neill explains. 

As with any stage, it’s a good idea to seek advice from a financial advisor to ensure your retirement plan is on track. They can provide personalised guidance and help you navigate financial decisions. 

Five years out from retirement 

Five years out from retirement is a pivotal time to fine-tune your plans and ensure you are fully prepared for the transition.  

Clearly define your retirement goals and lifestyle expectations. Ensure that your plans are realistic and achievable based on your current financial situation. 

Make any necessary adjustments to your investment strategy and take full advantage of any catch-up contributions available to you. 

“Now may be the time to shift your investment portfolio towards more conservative assets to protect your savings from market volatility. Consider increasing your allocation to bonds, cash, or other low-risk investments. Your financial advisor can explain what funds you should consider,” O’Neill says.  

Check your retirement budget again and identify any potential gaps that need to be addressed. For example, if you are considering downsizing your home or relocating, start planning and researching your options. This can help reduce expenses and free up equity for retirement. 

Consult a financial advisor to ensure your retirement plan is comprehensive and still on track.  

Two years out from retirement 

Two years out from retirement is a critical time to solidify your plans and make final preparations.  

“Finalise your intended retirement date and communicate your plans with your employer. Ensure you understand any requirements or procedures for transitioning out of your current role,” explains O’Neill. 

“Revisit your retirement goals and lifestyle expectations. Make sure they are still realistic and aligned with your financial situation. It’s also a good opportunity to confirm your expected income in retirement and ensure this income will cover your anticipated expenses. Adjust your spending plans as necessary and make any final contributions or adjustments to your savings accounts.” 

With regard to estate planning, it’s a good idea to review and update your estate plan to ensure your assets will be distributed according to your wishes and minimise potential tax implications.  

“Plan how you will withdraw funds from your retirement accounts. Consider tax implications and develop a strategy that minimises taxes and maximises your income,” O’Neill adds. 

Again, a financial advisor can guide you through the various steps at this important stage. 

One year out from retirement 

One year out from retirement is the time to finalise preparations and ensure everything is in place for a smooth transition.  

Reaffirm your retirement date with your employer and ensure all necessary paperwork is completed. Review and finalise your retirement budget and make adjustments as needed to ensure your budget is realistic and sustainable. 

“Ensure you have a clear understanding of how much income you will receive and when it will start,” O’Neill explains.  

“If you haven't done so already, decide when to start claiming the State pension and file for benefits if you plan to start receiving them at retirement.” 

O’Neill says at this point you should contact your pension plan administrator and retirement account providers to understand the process for accessing your funds. Complete any required paperwork for distributions or rollovers. 

“Make any final adjustments to your investment portfolio. It’s key at this stage to focus on preserving capital and generating income.” 

You should also develop a detailed plan for withdrawing funds from your retirement accounts. “Consider tax implications and create a strategy that provides a steady income while minimising taxes. And schedule a final review with your financial advisor and solicitor to ensure all your financial and legal documents are in order and aligned with your retirement goals.” 

Review any employer-provided benefits you may be eligible for in retirement, such as retiree health insurance, life insurance, or other perks and understand how to access these benefits. 

Once you have all the paperwork done it’s time for you to plan how you will spend your time in retirement. Consider hobbies, volunteering, travel, or other activities that will keep you engaged and fulfilled. 

Looking forward to future financial security 

By taking the steps outlined in this article, you can ensure a smooth and successful transition into retirement; setting yourself up for a financially secure and fulfilling retirement lifestyle. 

Finally, take time to celebrate your accomplishments and reflect on your career. Acknowledge this significant life transition and look forward to the opportunities retirement will bring. 

If you are nearing retirement, it pays to get expert pension advice. Speaking to a Zurich Financial advisor or your own financial broker will be helpful when reviewing and refining your strategy before choosing the right solution for your retirement needs. 

Source: ¹Gov.ie: Health in Ireland Key Trends   

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