Recognising the unique financial challenges women face throughout their lifetime is critical in ensuring a financially resilient future. Armed with education and a plan, women can feel more confident about their financial goals and how they’ll achieve them. Recently, we invited submissions for a complimentary bespoke financial plan devised by the all-female advisory team at Goodbody. We received numerous entries, and selected three personal stories which feature challenges that many of us will face during our lifetime. Here we present one such story.
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In her own words: the financial challenge
In 2017, I was diagnosed with cancer. I took a year out of my work as a public servant to focus on my recovery. Upon returning to work, I discovered I was not entitled to paid sick leave for the next four years. Following another diagnosis in 2021 and another year out of employment, I faced the same issue on returning to work, creating a significant financial strain. Earlier this year, the cancer returned. I am currently on Temporary Rehabilitation Remuneration (TRR) leave, receiving only a third of my annual salary, and travelling a long distance two days a week to undergo chemotherapy.
I have always found discussing finances overwhelming and would prefer to avoid a discussion on this topic altogether, but I am acutely aware that I am always one scan away from hearing the news I don’t want to hear. And so, I would like your help to put a financial plan in place to ensure financial security for my children’s future. That way, I will finally be able to relax and concentrate on my treatment.
Alice, 60
Married mum of two young adult children and public servant
The financial situation
When Alice was diagnosed with cancer in 2017, understandably, the financial challenges that lay ahead were not top of mind – her health was her main concern. Seven years on, as she continues to navigate life with a serious illness, she is also grappling with the substantial financial burden that comes with it.
Financial planning usually involves planning for predictable life events, but no matter how carefully you plan, life can throw a curveball at some point. That’s when financial planning becomes even more relevant as some people with serious illness, like Alice, may be forced to retire earlier than they had planned, resulting in a loss of income and potential retirement savings. Nevertheless, there are financial strategies that we can explore to improve and alleviate immediate financial pressure while helping to provide financial security to their loved ones in the future.
Having worked in the public sector for almost two decades, Alice has both a public sector pension and a private pension. Together with her husband David, they own their home outright and are mortgage-free. Her share of the household expenses is roughly €10,000 per year. While she currently has no savings or investments, Alice has a pension from her previous employment worth approximately €50,000 in addition to her public-service pension.
The Goodbody advice: accessing retirement funds now
Our plan to enable Alice to reduce the current financial burden she is facing as she continues to undergo chemotherapy treatment and ensure financial security for her children’s future, focussed on two key areas:
• Accessing her retirement funds now: Alice has a mix of private and public sector pension entitlements and there are different options available in respect of each. In relation to her private sector benefits, she can pursue a little-known ill-health Revenue concession which could allow Alice to access a tax-free lump sum from her private pension now. The balance of the pension may be payable at a special 10% tax rate immediately. Her public sector pensions have different ill-health solutions available, which include:
o Ill-health early retirement: this would allow Alice to retire before her normal retirement age and get an immediate payment of her pension benefits, without actuarial reduction. Alice would be eligible having been a member of the scheme for more than two years and being too ill to work.
o Short service gratuities: a one-off lump sum payment to a person who retires on the grounds of permanent incapacity.
o Occupational Supplementary Pension: another potential benefit. It aims to bridge the gap between the member’s current pension as a class A PRSI contributor and the pension they would receive as a class D PRSI contributor (available to those who retire on ill-health grounds).
Importantly, each option comes with its own set of rules and potential outcomes, so careful consideration and professional advice are needed to determine the best path forward. In Alice’s case, ill-health early retirement claims proved useful, and relieved a lot of her current financial strain.
• Making a will: Alice drew up her will to ensure that her children benefited from her pension assets and set up an Enduring Power of Attorney to ensure that her interests were protected should her illness deteriorate. Having a will in place ensures that her assets will be passed to her husband David and her two children in a controlled manner and without any confusion.
A final thought…
At Goodbody, we encourage those facing serious long-term illness to seek professional advice. Alice’s situation is undoubtedly challenging, and we greatly admire her resilience: she is taking important steps and making tough decisions to secure her – and her family’s – financial future in light of her illness. We hope she now feels confident in her financial future and has the peace of mind to concentrate on her treatment.
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Please read: For confidentiality purposes, names, monetary sums as well as any other personal details including identifiable characteristics of individuals have been changed. These case studies are illustrative examples only – they do not constitute investment or tax advice or a personal recommendation as they do not take into account the investment objectives, knowledge & experience or financial situation of any individual. Not all recommendations are necessarily suitable for all investors and Goodbody recommend that specific advice considering your personal circumstances should always be sought prior to making any investment. Figures quoted are estimates only. Past performance is not a reliable guide to future performance; neither should simulated performance. The value of your investment may go down as well as up. The value of securities may be subject to exchange rate fluctuations that may have a positive or negative effect on the price of such securities, sales proceeds, and on dividend or income interest.
This is a marketing communication. Nothing in this publication constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. Goodbody Stockbrokers UC, trading as Goodbody, is regulated by the Central Bank of Ireland and Goodbody Stockbrokers UC is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Goodbody is a member of Euronext Dublin and the London Stock Exchange. Goodbody is a member of the group of companies headed by AIB Group plc.