Would having lump sum at 65 affect state pension?

Cailte

Registered User
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Through investing money from a house sale, I will have 140k maturing in 2016 (when I am 46). I was thinking about putting this money into a 10 year An Post Savings bond along with an extra 20k and so when that would mature in 2026, I would be 56 with about 235k savings. As I joined the public sectior after 1995, I won't get a state pension until I am 68 so my plan is to keep working, if my health allows, but in a work sharing capacity (a 3 day week) from age 56 on until 68 and live off the interest of the savings.

However... if I have 235k at age 68, is it quite possible that I would get a very much reduced state pension? If that is the case, I am more inclined to use the lump sump in 2016 to move house, as my husband would love to do so and enjoy the money while I still can.

I suppose what I am asking is, is it possible to save too much, so that the state pension could be massively reduced for me, just because I have savings to hand?
 
If you are paying PRSI at class A (which public servants who joined since 1995 pay), then the state pension you receive will be based on your contribution history and will not be means-tested (based on the rules which currently apply, of course, things can change in the future).

Your public service pension may be affected by reducing your working week (you will accumulate service more slowly), so you may wish to check that out before making any decisions.
 
Contributory State Pension at the moment means that you are entitled to the pension regardless of other means. However, you may not be entitled to other benefits (medical card, various allowances for fuel etc.) which are (and should be) means-tested. Also, you may be liable for income tax based on interest on savings. Unfortunately, however, nobody knows what is likely to happen in terms of tax/revenue/government strategy even in the short term. You really have to follow your instinct - some of us are savers, others are spenders, some risktakers, others not.
 
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