Pension Advice - Looking to retire

G

gbstd21

New Member
Messages
2
Hi I would really like to retire immediately but I am worried about the financial implications of it. I am 64 later this year. I have two pots - 380k (previous employer) and 110k (current employer). I live alone , no dependents, and will have cleared my mortgage balance with some savings once I decide to go so not outstanding loans.

I am looking for advice anyone who has purchased recently or is familiar with current Annuity and ARF products:

1) What level of income could I reasonably expect to buy with these right now either Annuity or ARF for 380k ?
2) The age old question - What gross yearly pension amount represents a comfortable lifestyle (30k?,40k?,50k?, other )
3) Anyone retired recently in maybe similar circumstances and willing to share thoughts on it ?

I know its an age old question but I am paid very well now with 100k+ and worried about letting that go. Apart from scuba diving hobby I have a relatively simple lifestyle and dont have expensive tastes or needs to travel the world.

I am thinking to leave my job soon but leave the 110k pot untouched for now but use the 380k to buy a product now that would supplement a small civil service pension that I already have following 27 yrs service some time back.

I am drawn to Annuity for the reason that rates were reasonable recently (4-5%) and it seems less risky and attracts less fees but I am far from an expert on this and would appreciate any advice.

I appreciate the current Trump effect both pots have suffered very recently (380k pot was 390k little while back) - so maybe the advice also would be to do nothing for a while.

As I said above any advice would be appreciated to help with a mind that is tossing and turning on this
 
Assuming your 63.5 years old looking for a single life, level annuity with no guarantee period... a market search would suggest an annuity rate ranging from 4.98% to 5.21% with a €380,000 purchase price. The 5.21% rate equates to €19,765/yr

Kevin
www.thepensionstore.ie
 
€380k would probably buy you an annuity of around €21,500 at 64.

What income constitutes a comfortable retirement? You really need to dig out your bank statements and figure out what you are currently spending per annum and go from there.

But, as a starting point, I think this calculator from Standard Life is quite useful -

How much do I need to retire? | Pension Planning | Standard Life

When you're planning for retirement it's important to think about the income you'll need to live the lifestyle you want. Our calculator can help you start planning today.
www.standardlife.ie
 
I retired around 62 I am now 72 I would say I spent more in the first 10 years than I will if I live another 20 years,
You say you have a small public service along with 2 pension pots,
What about your Contibutory Pension will you get the full pension or do you need to push out claiming for a few years.and pay or sign for credits,
You also have a house Mortgage free and no dependents,

Are you going to claim the full tax free lump sum or have you already factored in in the 380k pot,
My understanding is you can buy an Annuity later with the lump sum you can also turn your ARF into an annuity at a later date,

Have you worked out how much you will have net of tax when all of the pensions are added together,
 
Thanks Fortune,
Interesting,
Just so I understand you Correctly, If I have lets say 200000 euro in spare cash and aged 70 can I no longer buy an annuity with this spare cash,

Can you still turn an ARF or part of an ARF into a Annuity still,
In my case I have around 600K still in an ARF at 72 I always thought I could put 300K into an annuity and leave 300K still in ARF or put 200K in an annuity and leave 400K in Arf,
 
Last edited:
Thanks Fortune
Hi gbstd21

When I retired I did not draw down my pension pot straight away, for the first time in my life I used social welfare payments to cover me until the payment ran out,
started paying at old prsi stamp at age 16, payed prsi for 46 years only ever drew Illness Benefit longest too weeks duration in five of the forty six years
Worked for the same company since 1979 The Paid a bonus for perfect attendance I received perfect attendance for over 30 years without a break lost out on a few by one or two week,
I was out sick stayed out until payment ran out went on to unemployment benefit until it also ran out signed for credits until I reached Contributory age,
I used savings along with the Contributory pension so had a good idea how much i needed per year before I touched pension pot,

Something you need to think about seeing you can no longer buy an annuity with savings but can buy an annuity with all or part of your pension pot or ARF any time after retiring,
as you would expect buying an annuity with the same money later in life rate for want of a better word inproves not expected to be drawing as long,
 
Last edited:
Charliemac
new to me also, I always thought you could buy an annuity with cash even if you had no private pension,
 
CharlieMac said:
Seems like a strange rule.
Click to expand...
It's not a rule, it's just that noone sells that product anymore. It wasn't as popular as other investments products, and anyone choosing it was likely to be in perfect health and expecting to live a long life, so the mortality rate couldn't be assumed to be beneficial when the actuaries were setting the annuity rates.
 
bkenn14 said:
I always thought you could buy an annuity with cash even if you had no private pension,
Click to expand...
Compulsory Purchase Annuities can only be purchased with the proceeds of a pension fund or Approved Retirement Fund. These policies have rules imposed on them by various Finance Acts and Revenue practice.

Purchased Life Annuities are much less restrictive and cash from any (legal) source can be used to buy one. The only issue is that noone sells them.
 
Thanks all for your advice above and apologies for my delay in replying.

kevhenry said:
Assuming your 63.5 years old looking for a single life, level annuity with no guarantee period... a market search would suggest an annuity rate ranging from 4.98% to 5.21% with a €380,000 purchase price. The 5.21% rate equates to €19,765/yr
Click to expand...
This was really good food for thought. I intend to take the lump sum out of the 380k pot before purchasing.

Would anyone have advice on the Annuity versus the ARF question ? In particular the up front costs of buying each and then any ongoing maintenance or transaction fees associated. In particular this is around the ARF which I have struggled to get anyone to give me a straight answer on the yearly fees
 
gbstd21 said:
Would anyone have advice on the Annuity versus the ARF question
Click to expand...
There are several threads on this issue if you search for them.
gbstd21 said:
In particular the up front costs of buying each and then any ongoing maintenance or transaction fees associated.
Click to expand...
There shouldn't be any up front costs for either or ongoing costs for an annuity if you shop around. And the AMCs for ARFs should be readily available as far as I know. E.g.

Approved Retirement Fund (ARF) - Royal London IE

Information about our at-retirement product. Our ARF or Approved Retirement Fund is an option to consider when deciding what you do with your pension pot. It offers a flexible arrangement that allows you to remain invested in funds after retirement and withdraw money as and when you want.
www.royallondon.ie
 

My relation had an ARF with Irish Life, through Cornmarket brokers

101% allocation, AMC = 1.5%.

A few years later we copped on, and switched the ARF to an execution-only broker www.prsa.ie

Now with Zurich, and the AMC is halved to 0.75%.
 
You must log in or register to reply here.
Menu
Log in
Register