Financial Wellbeing in Retirement - Issues for Women

K

Karina

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Hi everyone,

Nominally as a marketing assignment* at Dublin Business School (but also for my own benefit), I'm looking into retirement planning for women. Specifically, mothers/carers who have taken time out or reduced their hours to raise kids or mind a loved one and are now back in the workforce with, say, 20+ years to retirement. Would these be the initial steps to take:
  1. Check current PRSI contributions status
  2. Acknowledging new shift to Total Contributions, see if current salary meets PRSI contributions thresholds. (Fun fact: my own part-time wages aren't even close. Do employer contributions count towards the 520?)
  3. Panic.
  4. Divert additional funds into PRSA or employer pension.
    OR
    Make additional paid PRSI contributions or plan to.
I appreciate the Homemaker's Scheme is now a factor, but as someone whose youngest child is 12, the amount of running around/ hands-on parenting is not any less so returning to full-time work is still probably three-five years away.

Also, if anyone is up for being interviewed, I would LOVE to chat about this topic in more detail.

Thanks a million,
Karina

* The assignment is marked on presenting findings in an online format and is not graded on the financial planning element. (This is my own topic of interest.)
 
Questions i would ask myself:



Assess what if any entitlements you may have based on partner pensions.



Is there the ability to generate income without spending time away from kids eg foreign language students, rent a room (obviously need the space), if you have land not in use could you forest it and reinvest income in a PRSA?



Can you target certain jobs with generous pensions when return to full time work.



Is it now time for the other parent to take parental leave (some firms offer it up to 18) or a career break to build up your entitlements by working more?







Can you plan for downsizing to fund retirement?
 
Another one I constantly remind myself. My kids don't care who cleans their house or if we get groceries delivered or if we batch cook or if we use the laundrette sometimes. We are not taking time out of work that is well paid to do those tasks. And we always consider our total compensation to include pension contributions, both employer and the compounding of ours. So our hourly rate is v high, even after tax and work related expenses.
 
All good points @misemoi and we have applied to take in a student. Once I achieve my new qualification it is absolutely my intention to target a job with proper pay and benefits.

I’d also employ a cleaner in a heartbeat but I need to boost my hourly income rate back to what it was pre-kids. (Honestly, if I’d known getting back on the rat race wheel was this hard, I’d never have gotten off.)
 
Karina said:
38? I’ve read over €352 for employee contributions but I see below that employer contributions might still count…
Click to expand...

I understand your confusion.

If you earn less than 352, you don't pay PRSI, but you are still given a contribution. [edited later to avoid confusion]
You need to earn 38 per week to get a contribution

(It's a great country, you could earn just 100 per week, never pay a penny in PRSI, but you still accumulate contributions)

1698430578157.png
 
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There are a nunber of relevant issues and opportunities.

- The PRSI/State Pension issue
- Greater longevity
- Less tolerance for investment risk, so often smaller retirement pots
- ‘Rent a Room’ in retirement (€14k tax-free)
- Downsizing
- Covenants from adult children
- Divorce/separation
- Retiring overseas for a cheaper lifestyle
- Where there’s a family business, ensuring the spouse who perhaps isn’t as involved day-to-day is paid and provided with a pension
 
Gordon Gekko said:
There are a nunber of relevant issues and opportunities.

- The PRSI/State Pension issue
- Greater longevity
- Less tolerance for investment risk, so often smaller retirement pots
- ‘Rent a Room’ in retirement (€14k tax-free)
- Downsizing
- Covenants from adult children
- Divorce/separation
- Retiring overseas for a cheaper lifestyle
Click to expand...
Thanks, @Gordon Gekko but could you clarify “covenants from adult children”? Not a term I’m familiar with.

The investment risk issue fascinates me. It’s well documented that women prefer safer investment options - and are less financially literate - despite managing household finances more than men. It’s almost like that short term focus creates some kind of heuristic bias….

As someone who studied financial planning (albeit in Australia and 15 years ago), I’m keen on long term share investing but found the Irish system with its deeming rules extremely frustrating.
 
Protocol said:
I understand your confusion.

If you earn less than 352, you don't pay PRSI, but you are still credited with a contribution.
You need to earn 38 per week to get a contribution

(It's a great country, you could earn just 100 per week, never pay a penny in PRSI, but you still accumulate contributions)

View attachment 8106
Click to expand...
That’s a helpful clarification plus a very useful table, thank you.

And it is a great country that recognises contributions from lower paid workers. Living off a lower wage is already tough without the further financial stress of not having a pension in retirement.
 
Protocol said:
If you earn less than 352, you don't pay PRSI, but you are still credited with a contribution.
You need to earn 38 per week to get a contribution

(It's a great country, you could earn just 100 per week, never pay a penny in PRSI, but you still accumulate contributions)
Click to expand...
If you earn at least 38 euro you get a full rate paid Prsi contribution. This is not credited Prsi. It is counted in order to achieve the 520 full rate paid contributions for qualification for the state pension.

A person earning 100 euro per week, generates a Prsi contribution of 8.80 euro which is paid by their employer.
 
S class said:
If you earn at least 38 euro you get a full rate paid Prsi contribution. This is not credited Prsi. It is counted in order to achieve the 520 full rate paid contributions for qualification for the state pension.

A person earning 100 euro per week, generates a Prsi contribution of 8.80 euro which is paid by their employer.
Click to expand...
Sorry, I didn't mean credited in the sense of "credited conts", sorry, that was confusing. I meant you are given a contribution.

I will try to edit it later.
 
Karina said:
Thanks, @Gordon Gekko but could you clarify “covenants from adult children”? Not a term I’m familiar with.

The investment risk issue fascinates me. It’s well documented that women prefer safer investment options - and are less financially literate - despite managing household finances more than men. It’s almost like that short term focus creates some kind of heuristic bias….

As someone who studied financial planning (albeit in Australia and 15 years ago), I’m keen on long term share investing but found the Irish system with its deeming rules extremely frustrating.
Click to expand...
Children can transfer up to 5% of their income to their elderly parents each year. It can make sense tax-wise.

In relation to risk, I think it’s natural caution meeting lack of understanding (for both sexes in respect of the latter).

The problem with longer term investing is that low risk sounds okay. It sounds prudent. But it’s actually rubbish in many cases.
 
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