How much do people aged 66 or over pay in income tax?

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And you are correct. It is the current generation of tax payers HAVE NEVER HAD IT SO GOOD!

Let's look at the facts and construct a 'misery index' of what you lose due to the mortgage rate; inflation and marginal income tax rate. I don't normally do free research, but from 1977 onwards the misery index is:

It's only ten years ago that the misery index dropped below 50.

Is the misery index real.

I seem to recall that interest rates with Irish Life hit a high of about 17% around 1982. My first mortgage was at, what I thought was a cheap 9.25% fixed!

Currently I'm fixing with Ulster bank for 2.7% over 5 years and I consider that nearly money for nothing, my variable being 2.5%. Also managed last year to move from one bank to another and moved from 4% to 2.5% on my home loan abroad.

My OH, when he started working, he remembers doing overtime for extra money, but about 80 pence was taken in every pound.
 
For those who have managed to have private pension, it is estimated that average pot they have is circa 200,000.
Today that 200,000 will buy pension of 10,000 a year BUT if index linked that drops to 5,000.

With the indexed at 5K, the person in retirement would be better off withdrawing 10 K each year, they'd get the interest on the balance, and the 200K would last 20 years. Not many people are going to make it to 86! But I believe that pensioners are forced into buying annuities. They are changing this in the UK. It's an open licence for annuity companies to profit heftily from the hard earned life savings of carefull people.
 
Currently I'm fixing with Ulster bank for 2.7% over 5 years and I consider that nearly money for nothing, my variable being 2.5%. .

Hi Bronte

Are you doing this in Ireland?

If the variable is some sort of tracker, fixing might not be a good idea.
 
With the indexed at 5K, the person in retirement would be better off withdrawing 10 K each year, they'd get the interest on the balance, and the 200K would last 20 years. Not many people are going to make it to 86! But I believe that pensioners are forced into buying annuities. They are changing this in the UK. It's an open licence for annuity companies to profit heftily from the hard earned life savings of carefull people.
.............

If people can put their pot into a AMRF they can retain the benefit but must withdraw @ least 5% a year.
That is a way around the Annuity Trap.
Ps . I intend living well past 86 !
 
The misery index doesn't (and couldn't) take into account the large numbers of those who sold mortgage free homes in the "boom" to the younger generation.

Should there be an examination of the relief from CGT given to PPRs?
 
Are you doing this in Ireland?

If the variable is some sort of tracker, fixing might not be a good idea.

Yep, Ireland, it's not a tracker nor is it a normal morgage, but the margin on it is fixed, what is variable is the interest rate charged. Apparently my margin is one of the lowest, according to the bank manager. It's not a normal mortgage, when they were in an immense hurry to dish out money they gave me some kind of commercial loan instead of a mortgage, didn't realise fully how it worked until a year later when I got a regular enough looking bank statement, similar to my current accounts statements.

I've always lost on trackers, but I want 5 years peace of mind on this one as it's still a decent amount owing, and I've another mortgage that I'm going to not fix. I see the Fed is considering rasing rates, there's talk in the UK, there is turmoil politicially elsewhere, so hedging my bets as it were. What I don't want is to get caught if rates should rise. As it is, with the same bank I'm paying over 4% for a regular mortgage as they use investors like me to make up for people on trackers and restructurers. For this other mortgage I don't care as the amount owing is now irrelevant.
 
Ps . I intend living well past 86 !

And fair play to you, but a man of 66 who dreams of riding the waves in Florida, or drinking cocktails in Phuket, is not the man of 86 who does not want to step outside his front door.

A friend of mine, her parents headed off to the South of France on retirement two or three years ago, he is now in hospital in Marseille, far from home and without a home actually, as they didn't yet buy.

You never know what life will throw at you.
 
The misery index also does not take account of the average multiple of salaries to house prices. Interest rates were high but repayments as % of salary probably weren't much worse. Repayment as % of salary would be a much better component of a misery index than just the interest rate.
 
From The Sunday Times, Sept 14

An interesting debate that surfaced last week on askaboutmoney.com, a personal finance forum, looked at a couple earning €36,000. Up to age 65,
they pay income tax of €2,250, universal social charge (USC) of €1,839 and pay-related social insurance (PRSI) of €1,440.
At 65 they are immediately €2,250 better off because the couple become exempt from income tax on the basis of their age and earnings. They also
become exempt from deposit interest retention tax on their savings.
At 66 they gain another €1,440 because at this age people stop paying PRSI. At 70 there is a further gain of €600 because they fall out of the 7% rate
of USC.
Their earnings are in good shape too because the bedrock of retirement earnings — the state pension of up to €12,000 per person — is the only core
social welfare payment that has not been cut. However, government has made it harder for pensioners to qualify for medical cards and slashed
subsidies for their energy and telephone bills and television licences.
Daring to question pensioners’ entitlements is a risky business, with emotions threatening to spoil the discussion on askaboutmoney.com. Cooler
heads were in control when the government’s Commission on Taxation examined the income tax exemption for pensioners in 2009. It concluded the
exemption should continue because the exchequer would gain little by taxing individual pensioners.
However, its analysis failed to take account of how valuable the exemption is for single-income couples, for whom it can mean substantial tax savings
when they reach 65, as seen by the example on askaboutmoney.com.
One of the justifications for being soft on pensioners is to provide some reward for the punishing taxes they paid in the 1970s and 1980s. Workers
currently paying 52% tax on earnings over €32,800 can only hope that future generations will be equally appreciative of their sacrifice.
 
From The Sunday Times, Sept 14

Thanks for posting up this, I buy the international edition but it doesn't naturally have Irish news stories.

If Noonon or his mandarins are reading this article, I hope they don't go after pensioners as an easy target. Though the medical card march, and the fact they are voters might temper his cuts.
 
I am assured by a pensioner who checked it, that the 36,000 threshold has the following catch . Can some AAM member advise.

He is married .
He has pension 23,000 .
She has pension 22,000.
.............................
Total pension 45,000
............................
Revenue say that the lower pension can avail of Nil tax.ie no tax on the 22,000.
The catch is that the higher pension gets no allowance ie taxed@41% on the full 23,000.

Seems the 36,000 is a bit of a con?

Await comments please.
 
I am assured by a pensioner who checked it, that the 36,000 threshold has the following catch . Can some AAM member advise.

He is married .
He has pension 23,000 .
She has pension 22,000.
.............................
Total pension 45,000
............................
Revenue say that the lower pension can avail of Nil tax.ie no tax on the 22,000.
The catch is that the higher pension gets no allowance ie taxed@41% on the full 23,000.

Seems the 36,000 is a bit of a con?

Await comments please.

The end result may be the same (the exemption doesn't apply, apart from limited marginal relief, if the income exceeds €36k) but otherwise their theory has no basis in reality.
 
It's excellent if the combined incomes are below or marginally above €36k, but meaningless otherwise.
 
It's excellent if the combined incomes are below or marginally above €36k, but meaningless otherwise.
.........

Thanks again;

What I was told is that combined incomes are NOT nil tax up to K36 ,but that revenue only allow nil on lower income .So in the case I have given. the couple will be taxed @41% on the 2nd income of 23,000 ie 9,430.

If so a combined income of 45,000 will get taxed 9,430.

Ergo .most pensioners are not being mollycuddled?
Am I correct?
 
The €45K is taxed as normal. There is very little difference if the €45K was earned by a couple who are 64 and a couple who are 65.

The only difference is that the 65yo couple will get the Age Tax Credit (worth €490)

When this couple reach 66 they also don't have to pay PRSI

NONE of the €45K is tax-free at any stage

None of it would be taxed at the 41% rate either, it's all at the 20% rate

The total PAYE payable on that pension income is €1,910

€45,000 x 20% = €9,000 less tax credits of €7,090* = €1,910

*marriage credit = €1,650 x 2 = €3,300
paye credits = €1,650 x 2 = €3,300
age credit = €245 x 2 = €490
 
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