Consumer Corner: Expert advice to make sure you don’t have to work after you’re 66

Here are some steps to take to help you retire comfortably at the age of 66

Recent research has found that the cost-of-living crisis has forced more people to delay their retirement.

The Government has decided to keep the State pension age at 66, but rising living costs and the housing crisis means that for many, retiring at the age of 66 is unrealistic. Here we explore some steps to take to help you retire comfortably at the age of 66.

Mark Reilly, pensions proposition lead at Royal London Ireland said there is no one-size-fits-all approach, as everyone will have different financial goals and aspirations for retirement.

The housing crisis has forced many people in their 30s or 40s to move back home with their parents or to rent indefinitely, but Mr Reilly said that if you can at all, try to buy your own home.

“If you’re in a position to buy your own home, do so, and if you’re not in a position to buy right now, perhaps consider making it a long-term financial goal simply because you could find it very difficult to make ends meet in retirement if you’re still renting,” he said.

He also said that people should not overstretch themselves financially when supporting their children. Many first-time buyers get money from parents to help towards the deposit for their home, and many parents may feel under pressure to give their children a handout.

“All parties need to be mindful that most parents do not have the financial capacity to help their children with this much as they would like to,” said Mr Reilly. 

“Any financial assistance given to a child should really only be taken from savings you might have to hand, provided you don’t exhaust your savings by doing so. Keep enough savings for yourself in case you are hit with unexpected expenses and to fund any plans you have for your retirement, as well as any healthcare or nursing home bills you could face in the future.”

Also, as tempting as it might be, parents also need to be careful about acting as guarantors for a child’s mortgage as they could be called on in retirement to repay that mortgage, which could force them back to work.

Glenn Gaughran, head of business development at the Independent Trustee Company (ITC) also said people should be careful about dipping into their pension early to help them weather the cost-of-living crisis, as this could prevent them from sustaining the retirement they aspire to.

“Recent research has found that the cost-of-living crisis has forced more people to delay their retirement,” he said.

“It is crucial that people make decisions now which will boost their chances of retiring at the State pension age of 66. Of course, there will be some people who will want to work into their late 60s and 70s, and even if you are one of these people, ill-health or injury could force you to retire earlier than you expect, so getting yourself into a position where you can retire at the age of 66 if you need to would be a shrewd move.”

Mr Gaughran says to avoid taking on large debt over your working life, as usually, the more debt you have, the longer it will take to clear it.

“Aim to clear any debt you have by the age of 66 or earlier if you can. Also avoid drawing out your mortgage until you’re 70. The biggest debt which most people will have is their mortgage. You may be able to get a mortgage up to the age of 70, depending on your bank, but avoid drawing out your mortgage that long because unless you clear your mortgage early, you’ll need to work until you’re 70 to pay your loan off.” 

Ray McKenna, partner of pension firm Lockton, said that ultimately, the more money you have in your pension, the better your chance of retiring at the age of 66 and of doing so comfortably too.

“So start saving into your pension early and make sure you’re saving enough into it,” he says.

He also said to join a work pension scheme if your employer offers one, particularly if your employer pays employer pension contributions on behalf of employees.

“Take full advantage of any employer pension contributions. Some employers pay matching contributions, where the more you pay into a defined contribution pension, the more your employer will pay.”

It is also recommended to save for college bills early. With many people getting married and having children later in life today, parents could be near, or even in retirement when their children go to college.

Mr Reilly said: “This could see many taking out loans in retirement to fund their children’s college bills as it could cost as much as €53,220 to send a child to college for four years. College bills could put huge financial pressure on parents as they approach retirement.

“If at all possible, make it your priority to start saving for your child’s college education once your child is born. Otherwise, you could find yourself taking on a large loan you had not anticipated very near or even in retirement.”