Q I am 35 and I don’t know if I will ever be able to buy my own home. Is my financial wellbeing in retirement in jeopardy?
A Owning a home is one of the four pillars to building financial wellbeing, but it is not the dominant one, says Frank Conway, founder of financial wellbeing provider MoneyWhizz and a qualified financial adviser. Owning a home allows the owner to tax-efficiently build personal wealth through the pay down of the mortgage and rise in equity, but it is not without cost. When a mortgage is paid off, there can be a temptation to argue that the owner is without cost. Mr Conway says nothing is further from the truth. As a property ages, so will its upkeep costs and this needs to be factored into the household budget. Other costs like insurance, energy efficiency and even property taxes are always going to be a factor. There are so-called “reverse mortgages’ that can release home equity without the need for regular monthly repayments. However, as they are broadly based on an estimation of when the homeowner will die, they are not for everyone. Additionally, placing a lien against the family home will often draw objections from those that might expect to benefit from an inheritance and so, scupper the plans of parents to take this route, Mr Conway said. Enrolling in an employer-sponsored pension or setting up the likes of a PRSA (personal retirement savings account) can go a long way to building other forms of wealth. They are a flexible and mobile form of personal wealth. Mr Conway advises those that have decided against buying a home to supercharge their pension by early enrolment, maximum contributions and to be unafraid of risk. Protecting your health is another major consideration. One can work in retirement. Individuals are also permitted to have reasonable levels of tax-free income. Property can play a big role, but it is not the only means of achieving financial wellbeing in retirement, he adds.
Q I need to have a hip replacement. There is an outpatient procedure in the USA that is not as tough post-op for the patient. I know this as I had one hip replacement. The Surgery is not offered in Ireland. Is it possible that I could have my Irish Life 4D Health 2 plan cover this in the USA?
A This query is not straight-forward, according to Dermot Goode of TotalHealthCover.ie. He said you will have to contact the insurer directly and ask about approval for medical treatment abroad. It is all subject to pre-authorisation and even if the insurer agrees to contribute towards the cost (which is never guaranteed), it is likely only to pay whatever it believes would be the cost if it was carried out in Ireland, he said. This could leave a significant shortfall. Mr Goode advises that you also have to take into account travel and accommodation costs which will not be covered by the insurer.
Q I read that the Irish Credit Bureau is set to close by the end of the year. Will this affect my credit rating?
A The Irish Credit Bureau is set to close near the end of this year. However, it is unlikely to have any real material impact on your own personal credit rating, according to Mr Conway of MoneyWhizz. The Irish Credit Bureau has been in existence since the 1960s and for much of that time it was the only real credit reporting service in the country.
Mr Conway says a major weakness in its business model was how it was owned. The primary stakeholders are the commercial banks. For a long time, lenders such as credit unions did not report their lending activity via the ICB and this resulted in consumer credit gaps. This did change in the last decade or so with the likes of credit unions reporting borrowers loan information to the ICB, but it was probably too late, he added.
Following the financial collapse and the State bailout, the Troika insisted Irish establish an independent credit reporting agency. The Central Bank’s Central Credit Register is now the predominant go-to place for credit underwriters across Ireland, Mr Conway added.
The data collected by the CCR is as comprehensive as a credit underwriter requires to make a fully informed decision on a credit application. This means the role of the ICB has begun to diminish. Mr Conway said the demise of the ICB will have no material impact on your personal credit history.
