Can I retire at 62 ?

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Personal details

Age: 59
Spouse’s/Partner's age: 53

Number and age of children: (x2) 23 and 20 working abroad, not in college

Income and expenditure
Annual gross income from employment or profession: 75k
Annual gross income of spouse: 41k

Monthly take-home pay; 6k

Type of employment: e.g. Civil Servant, self-employed
- Private sector Employee (me)
- Clerical Officer (Local Authority) (spouse)

In general are you:
(a) spending more than you earn, or
(b) saving? Saving more than spending


Summary of Assets and Liabilities
Family home worth €520k with no mortgage
Company shares : none
Buy to Let Property: none

Other borrowings – car loans/personal loans etc: None

Do you pay off your full credit card balance each month? Yes

Other savings and investments: 430k on deposit with a bank, 15k Std Life Moneyworks Bond

Do you have a pension scheme?
- PRSA via employer: 100k currently, contributing 20% of gross salary monthly (15% self, 5% employer)
[I can also top this up with my annual bonus - usually 10%]
- 2x PRBs: Currently worth 210k and 75k
I will be entitled to the Contributory State Pension at 66 (or is it 67?)
My wife will get a pension from the local authority but we are not sure how to calculate what it'll be.

Do you own any investment or other property? No

Other information which might be relevant

Life insurance: Provided by my employer (2.5 times gross salary on death-in-service)


What specific question do you have or what issues are of concern to you?
I'd like to retire at 62.
Is it do-able financially based on the info above? If not what can i do to make it happen?
I've reviewed our essential and non-essential spending and reckon expenditure could safely be at 2k month.
(We're not very extravagant!)

What's the best way to choose between ARFs and Annuities to ensure the 2k expenditure at least is covered, until the State Pension kicks-in.
Do I need a financial advisor to help select between pension funds?
How much would I expect to pay for advice? I've reviewed some websites but find it difficult to pin down rates (fees, ongoing charges, advice types...)
How do i setup a ARF or annuity - directly or through an agent/advisor?
(I've heard annuity rates are improving again, so how do i compare rates from providers - what are the rates now?)
Can I setup ARFs and annuities ?

How can I optimize a mix of lump-sum, ARFs and/or annuity given that its hard to predict the return on a ARF or annuity rates?

Thanks!
 
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If it's 5 years of retirement until the state pension kicks in (age 62 vs. pension age 67) and you need 2k per month that's ~€120k needed. You have €430k on deposit. I don't see why you couldn't retire at 62.
 
2k a month seems optimistic. Do you have a car ? When you retire you'll need health insurance. Your kids are abroad so you'll want to travel. But with 400k savings you still have 10 years without needing pension. Maybe try a spending diary to see what you might need though just in case.
 
I agree 2k a month seems very low to me Particularly given food and energy price inflation I see when shopping . Eg a litre of Tesco milk 1.15 from 75p a year ago or so
The state pension age is 66 so it’s 4 years from 62 rather then 5 mentioned above
 
I understand government intends making a persons nra less than state pension age illegal from 2024 as per Irish independent a few weeks ago
 
ClubMan said:
Might this be relevant here too?

Payment for people who retire at 65

If you retire at 65, you may qualify for a benefit payment until you reach 66. The payment is similar to Jobseeker’s Benefit, but you don’t need to be looking for work or sign on at your local Intreo centre.
www.citizensinformation.ie www.citizensinformation.ie
Click to expand...
I understand government intends making a persons compulsory retirement age less than state pension age illegal from 2024 as per Irish independent a few weeks ago. In light of this payment at 65 you quote is very unlikely to stay.
 
Thanks all.
So, i'd need to self-fund from 62 to 66. We would also have my wifes income during that time = 2.2k mth.
Agree too that 2k spend is probably a bit optimistic due to inflation, fuel bills etc.., although this is based on our spending history over the past year. More like 3k then. I would then need to self-fund minimum 1,000 mth + wifes income.

My employment contract has a retirement age limit of 65.

Options
- Self-fund from savings - 48k total (min) over 4 years. Remaining at age 66 : 400 - 48=352k
- At 62, is it possible access the UB for 9 mths?
- Start an ARF to top that up maybe from the largest pension fund (1x PRB , 200k value) ? (with or without tax-free lump-sum)
- Put savings (upto 350k) into to Savings Certs to mature at age 66? (or 505:50 split certs and cash, for emergencies)
- At 66, take remainder of pensions as ARF + annuity

All a bit general i know, but am trying to zero-in on do-able strategies.
 
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I'm not the expert but there a few threads on how to use ARF income while you are under 66 to ensure that Class S PRSI is paid so that you are still building up eligibility for the contributory state pension (only relevant if you won't have 4,080 contributions by age 62 of course).
 
is there any reason you have so much cash and a relatively low pension pot? if it was inherited as a lump sum fair enough but if its accumulated savings it should have gone into pension surely?
 
Most of it inherited.
Is approx 400k pension pot considered relatively low? (relative to what?)
 
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In your shoes, I would retire the smaller PRB at 62, take the tax-free lump sum and transfer the balance to an ARF. Then draw down €12,500 per annum from the ARF until exhausted.

There’s no income tax or USC at that income level and the PRSI payments will maintain your record.

You could live on that, plus your after-tax savings, until the State Contributory pension kicks in at 66.

Then retire the larger PRB, take the 25% TFLS and draw 4% per annum from an ARF, rising to 5% from 70.

You could live on that, plus the State Contributory pension, plus your after-tax savings, until you hit 75 when you would have to retire your PRSA.

I think you should have sufficient assets to retire at 62, with a projected annual spend of €36k.
 
It’s just maths for your pension pot. So you want a €3K income per month. €36k per annum. Less full state pension of €13.5K per annum, leaves you a €22.5K per annum spend from your pension. Excluding growth in the pension pot and excluding inflation this will last 17 years (€210+74+100/22.5). Which brings you to 83 when your pension fund runs out.

But including your savings with your pension pot you are in a great position. So if you retire at 63 and wish to use €36K PA, that uses up €108K before 66. That leaves you with a total pot of €410K+75K+210K+€100K-€108K, leaving €707K which will last until you are 97 before you money runs out, ignoring all growth or inflation.

Sarenco gives you the sophisticated ideas on how to do it to enhance returns and growth.

Given your projected spending you should have plenty to retire at 62. Enjoy.

There are several independent financial advisors on the forums who for a one fee would give you projected figures based on your paperwork and their expert knowledge.
 
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Money on deposit as a pensioner can actually be a liability when it comes to Fair Deal (if you need it further down the line) so there is a logic in reducing that amount. Is there anything you need to do to the house, have a good holiday, gift some of it to your kids over the years to help them fund a deposit for a house etc?

You can certainly afford to retire at 62 but I do think living on 2k a month is probably a bit optimistic.
 
Sarenco said:
In your shoes, I would retire the smaller PRB at 62, take the tax-free lump sum and transfer the balance to an ARF. Then draw down €12,500 per annum from the ARF until exhausted.
Click to expand...
One small suggestion I would make here is to draw down €17,750 to make full use of the tax credits while avoiding paying 20% income tax.

Effectively there is an extra ~€20k that can be removed from the ARF over the next 4 years by paying a very tiny amount of USC. Otherwise, access to that €20k in future will cost the OP at least 20% when state pension and the second PRB will push them into the 20% tax bracket on their income.
 
elcato said:
When you retire you'll need health insurance.
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Why ? Most people I know that are currently retired do not have health insurance and also have complex medical needs, and they all seem to get access to consultants, hospitals etc whenever they need it.
I do understand the rationale for having it in terms of access and piece of mind etc, but it's just so damn expensive and you're essentially paying for something that you have already paid for, and are fully entitled to. I'm just not sure its money well spent. If you never paid health insurance and just paid for hospital stays, consultants, drugs etc as they came up when you need it, you could never spend the cost of all those premiums year after year.
 
Rasputin said:
Why ? Most people I know that are currently retired do not have health insurance and also have complex medical needs, and they all seem to get access to consultants, hospitals etc whenever they need it.
I do understand the rationale for having it in terms of access and piece of mind etc, but it's just so damn expensive and you're essentially paying for something that you have already paid for, and are fully entitled to. I'm just not sure its money well spent. If you never paid health insurance and just paid for hospital stays, consultants, drugs etc as they came up when you need it, you could never spend the cost of all those premiums year after year.
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I agree with you. In the context of the question I was referring to what extra costs you may have. I should have stated 'You may need to pay for health insurance'. ;)
 
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