Are you retirement ready?

October 22, 2019

Retirement means a lot of adjustment for many people and while it gives us the chance to relax and the time to try new things, it is something you should plan for well ahead of that final day in work.

Some of the things you might want to consider before retirement are:

• When would you like to stop working and will you be able to afford to retire then?
• What will your income be when you finish working?
• What will your bills and outgoings be when you retire?
• Will your pension be paid monthly or weekly and is this different from how you are paid now?

Change in income

One of the biggest changes you will experience in retirement is a possible change in income. The maximum state pension a person can get is currently €248.30 per week and this can go up or down each year depending on the Government budget.

When you retire, you may no longer have some outgoings, such as the cost of travelling to work, and other big expenses, such as your mortgage, may be cleared by the time you retire. However you may face increases in other costs, such as health care.

Therefore it is important to consider things like; what is your income now, what will it be when you finish working, will this be enough to have the lifestyle you want and what do you think your outgoings will be when you stop working?

Getting the right advice

Your pension is one of the most important financial products you’ll ever have and plays a big part in the type of lifestyle you’ll have in retirement so it is worth thinking about getting financial advice and also making sure you ask the right questions.

Pensions are complex and a financial adviser will be able to explain any terms you don’t understand and walk you through what you need to know and recommend what should be done at different life stages.

For example, if you are in your twenties and have the majority of your working life ahead of you, your pension might be invested in funds that have a certain level of risk but if you are ten years from retiring it may make sense to move to a less risky investment as you will have much less time to recoup any possible losses.

When can you get your pension?

When you can start receiving pension benefits depends on the type of plan you have, however most pensions allow you to take benefits early if you have to give up work due to a serious illness.

If you retire early, your pension will be much lower than if you continue to work and make contributions up to the expected retirement age for your pension plan.

Type of plan	When you can retire
Personal Pension Plan (PPP)	Age 60. You can continue working and contributing if you want, and delay taking benefits up to age 75.
Personal Retirement Savings Account (PRSA)	Age 50 if you are an employee and retiring from that employment. Age 60 for others, such as people who are self-employed or not earning an income. You can continue working and contributing if you want, and delay taking benefits up to age 75.
Employer pension plan (including any AVCs)	Usually 60 or 65. Some plans allow early retirement from age 50, with your employer’s consent.

When you draw down your pension you will have the option of taking a tax free lump sum of 25%, up to a maximum of €200,000. The options available for the remaining 75% will depend on whether you have an additional secured income of at least €12,700 per year or not (i.e. benefits from another pension or rental income).

We have lots more information on retiring and pensions on our website.

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