Financial wellbeing is becoming a major area of focus at EU level. That in turn has driven a programme here in Ireland at the Department of Finance that is focused on the financial literacy aspect of financial wellbeing. MoneyWhizz has been actively delivering in this space for over a decade.
Financial wellbeing is a state where people can manage their financial needs and obligations. Additionally, they can manage the onset of life events, financial challenges and change. And they are in a position to enjoy life, to do the things they have aspired to, including travel, hobbies and more.
It a long-term approach
Weaving financial wellbeing into retirement planning cannot be done overnight.
It requires a holistic approach to budgeting and long-term financial planning, including factoring the impact of inflation on financial needs.
And finally, successful financial wellbeing in retirement requires an understanding of one’s own financial personality. This is an important consideration as it can have a major impact on long-term plans. It is here that so many people can get caught out on their needs, especially if they place too much attention on their current needs without adequately planning for their future.
The MoneyWhizz approach
MoneyWhizz has developed a unique new calculator that is designed to weave the true financial cost of retirement. It factors for 8 financial variables, including income, career progression, income tax bands, inflation and much more. This permits people to develop a financial plan that mirrors what their financial needs are today.
Its not just an amount, it’s a quality-of-life amount
One challenge people can have when planning for their future financial needs is the value of money in the future. Simply saving into a pension is not the final answer. Instead, the question people need to ask their financial planner is whether their financial plan will deliver the lifestyle they enjoy today in 20- or 30-years’ time. This is the real meaning of a retirement plan that is focused on future financial wellbeing.
Eliminating the inflation dilemma
Inflation erodes the value of money over time. So, for someone that is a good saver, the challenge they face is the erosion of buying power. €50,000 in savings in 2025 will have fallen to €41,000 in buying power by 2035 where inflation is just 2%. Without factoring this into a retirement plan, the financial wellbeing situation can be very different. At MoneyWhizz, we recommend a modestly above-average inflation factor to ensure the financial needs of a client is managed. This is typically about 2.5%.
State pension changes
Beginning 2025, the Irish State will being phasing in a new calculation to the State pension qualification. 2025 will also see the roll-out of auto-enrolment pensions in the workplace. And for those that have worked there, the UK authorities will cease offering their pension buyback option.
This year will be an important one for long-term financial planning and financial wellbeing in retirement.
Frank Conway is a Qualified Financial Adviser and Founder of MoneyWhizz. He is a leading developer of a range of financial wellbeing events and supports.
Bluesky – moneywhizz.bsky.social
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