Managing Money – Post Retirement

• Jim Dunne BBS QFA FLAI • IF Financial Advisors• 086 827 3717 or 065 6845 111• jim@iffinancial.ie • For more see www.iffinancial.ie

Sept 2014

Managing your finances

Review Your Finances

Plan for the unexpected

Reduce your outgoings• Insurance•Electricity•Telephone•Tax credits

Rearrange your debt ?

Investments

If its too good to be true …..

Be careful !!

Move to lower risk near maturity

Inflation trap

The real purchasing power of your money declines in a period of high inflation.

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Impact of Inflation

2% 4% 6%Inflation

Time

Year 0

Year 5

Year 10

Year 15

Year 20

€ 10,000 € 10,000 € 10,000

€ 9,039 € 8,154 € 7,339

€ 8,170 € 6,648 € 5,386

€ 7,386 € 5,421 € 3,953

€ 6,676 € 4,420 € 2,901

Why am I investing ?

• To provide for my retirement• To provide for my children• Non-financial reasons

• Holiday home• My dream retirement career

Bank deposits

www.itsyourmoney.ie

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Post Office Savings Certs – 5.5 years - cumulative 21%

(3.53%p.a.) – tax free – guaranteed Savings Bonds – 3 yrs – cumulative 10% (3.23%

p.a.) - tax free – guaranteed Max €120k or €240k for couple per product Prize Bonds

10 Year National Solidarity Bond

• 50% gross over 10 years or 4 years @ 15% gross or 3.52 pa

• Includes bonus of 40% at maturity• 1% per annum (subject to DIRT)• €1,000 over 10 years gives €500 gross or

€475 net – yearly interest is subject to DIRT

• Net rate is 3.96% per annum

Investments – Risk vs. Reward

Risk Reward

Investment classes

Equity fundamentals

Average capital appreciation of 8.3% over last 30 years

16,985 @ 10/7/14

10 year extrapolation at 8.3%

Property fundamentals

• Sentiment

• Demand

• Affordability

Managed funds• Direct V’s Indirect investment• Investors pool resources• Diversification - 500+ funds – • Professional Management• Cost effective• No control • No Guarantees V’s Capital Guarantee

•Last minute AVC’s

•ARF’s

Pensions

Last minute AVC’s• Explore Opportunity to see is it possible to make

a last minute Pension Contribution before retirement

• Advantage is tax relief and option to take money back as part of the Tax Free Lump Sum.

• Specialised advice is required to maximise this opportunity

Example: A Reduced Pension & Lump Sum

€7,000 p.aSalary

€70,000 €28,000 p.a

€20,000

€80,000

Tax Free

Pension 32 yrsPension 32 yrs Lump SumLump Sum

Tom retires at 56, Salary €70,000

with 32 years Service

(Short 8 yrs pension)

Last Minute AVC? Tax Advantages• Pay €20,000 to a LMAVC before retirement date !

• Allowed Tax Relief at 41% x 20,000 = €8,200

• Gain €20,000 extra in your Tax Free lump Sum at a cost of only €11,200

• 20,000 paid & 8,200 Tax Relief (20,000 @ 41%)

• €20,000 Cost only €11,200

Approved retirement fund• This is a holding place for certain monies not

withdrawn from your Pension Fund• Range of investment options available under this option• 5% required to be withdrawn yearly• Withdrawals are assessed for income tax• Offers alternative to purchasing annuity• Can transfer to Spouse and Children in a tax efficient

manner

Disclaimer• These slides are intended only as a guide because rules and

regulations are ever changing.• In regard to individual queries, specific professional advice

should be sought.

The Retirement Planning Council27 – 29 Lower Pembroke StreetDublin 2 Tel: 01 6613139Email: information@rpc.ie Website: www.rpc.ie

IF Financial Advisors • Jim Dunne BBS QFA FLAI • 086 827 3717 or 065 6845 111• jim@iffinancial.ie • For more see www.iffinancial.ie

• Thank you – Any Questions?