Deferring your State Pension (Contributory) - break even point is age 88

[TheJackal]

	Age when you start to claim	Maximum rate	per year	diff v 66
	Age 66	€277.30	€14,469.51	€0.00
	Age 67	€290.30	€15,147.85	€678.34
	Age 68	€304.80	€15,904.46	€1,434.95
	Age 69	€320.30	€16,713.25	€2,243.74
	Age 70	€337.20	€17,595.10	€3,125.58
Age	66	67	68	69	70
66	€14,469.51	€0.00	€0.00	€0.00	€0.00
67	€28,939.03	€15,147.85	€0.00	€0.00	€0.00
68	€43,408.54	€30,295.71	€15,904.46	€0.00	€0.00
69	€57,878.06	€45,443.56	€31,808.93	€16,713.25	€0.00
70	€72,347.57	€60,591.42	€47,713.39	€33,426.51	€17,595.10
71	€86,817.08	€75,739.27	€63,617.86	€50,139.76	€35,190.19
72	€101,286.60	€90,887.12	€79,522.32	€66,853.02	€52,785.29
73	€115,756.11	€106,034.98	€95,426.78	€83,566.27	€70,380.38
74	€130,225.63	€121,182.83	€111,331.25	€100,279.52	€87,975.48
75	€144,695.14	€136,330.69	€127,235.71	€116,992.78	€105,570.58
76	€159,164.65	€151,478.54	€143,140.18	€133,706.03	€123,165.67
77	€173,634.17	€166,626.39	€159,044.64	€150,419.29	€140,760.77
78	€188,103.68	€181,774.25	€174,949.10	€167,132.54	€158,355.86
79	€202,573.20	€196,922.10	€190,853.57	€183,845.79	€175,950.96
80	€217,042.71	€212,069.96	€206,758.03	€200,559.05	€193,546.06
81	€231,512.22	€227,217.81	€222,662.50	€217,272.30	€211,141.15
82	€245,981.74	€242,365.66	€238,566.96	€233,985.56	€228,736.25
83	€260,451.25	€257,513.52	€254,471.42	€250,698.81	€246,331.34
84	€274,920.77	€272,661.37	€270,375.89	€267,412.06	€263,926.44
85	€289,390.28	€287,809.23	€286,280.35	€284,125.32	€281,521.54
86	€303,859.79	€302,957.08	€302,184.82	€300,838.57	€299,116.63
87	€318,329.31	€318,104.93	€318,089.28	€317,551.83	€316,711.73
88	€332,798.82	€333,252.79	€333,993.74	€334,265.08	€334,306.82

In all cases, deferring your State Pension (Contributory) from age 66 to either 67, 68, 69 or 70 will take until age 88 to break even

Deferring your State Pension (Contributory)

You can start to claim your State Pension (Contributory) at any age between 66 and 70. This page explains who can defer (delay) their State Pension (Contributory), rates for different age groups, and how to apply.

www.citizensinformation.ie

 

[TRS30]

So all gravy after 88

 

[Dr Strangelove]

If you factor in the time value of money the breakeven age is in the 90s.

It only makes sense for someone who doesn’t have 2080 PRSI contributions by 66 and needs a few more years of employment to get there. Or perhaps some big drop in other income that would see marginal rate fall from 40% to 20%.

Even still I suspect the numbers who will take this up will be small, and most of those will have been ill-advised.

 

[conor_mc]

Just an alternative way of considering this instead of break-even period, but if I wanted to forego €277 a week for four years, I could put it on deposit at say 3% to build up a pot of about €61,500, then buy a €3,125 annuity at 5.5% (taking an annuity rate from a recent post here) for €56,818.

In that light, it’s not the worst deal going. But you could do significantly better by investing rather depositing if your plans could tolerate that risk.

 

[Dr Strangelove]

In that light, it’s not the worst deal going.

If I do the sums that’s 100/5.5 or 18.7 years of expected annuity at 70. You deflate that by the 12.5% investment return over the three years so 16.9 years. So putting the money in deposit then purchasing an annuity would see someone break even at 87 rather than 88.

 

[conor_mc]

Just an alternative way of considering this instead of break-even period, but if I wanted to forego €277 a week for four years, I could put it on deposit at say 3% to build up a pot of about €61,500, then buy a €3,125 annuity at 5.5% (taking an annuity rate from a recent post here) for €56,818.

In that light, it’s not the worst deal going. But you could do significantly better by investing rather depositing if your plans could tolerate that risk.

If you did build up €61,500 at age 70 though and invested at just a 5% average return (ignoring volatility/sequence of return risk for the purposes of this hypothetical exercise), you could withdraw €260/month or €3125 a year, and still have €59.5k of capital left after 25 years.

(Edit: Oops, double post!)

 

[TheJackal]

2025 State Pension (Contributory) Rates (all up €12 weekly)
Break Even age now at 89

	Age when you start to claim	Maximum rate	per year	diff v 66
	Age 66	€289.30	€15,095.67	€0.00
	Age 67	€302.30	€15,774.01	€678.34
	Age 68	€316.80	€16,530.62	€1,434.95
	Age 69	€332.30	€17,339.41	€2,243.74
	Age 70	€349.20	€18,221.26	€3,125.58
Age	66	67	68	69	70
66	€15,095.67	€0.00	€0.00	€0.00	€0.00
67	€30,191.35	€15,774.01	€0.00	€0.00	€0.00
68	€45,287.02	€31,548.03	€16,530.62	€0.00	€0.00
69	€60,382.70	€47,322.04	€33,061.25	€17,339.41	€0.00
70	€75,478.37	€63,096.06	€49,591.87	€34,678.83	€18,221.26
71	€90,574.04	€78,870.07	€66,122.50	€52,018.24	€36,442.51
72	€105,669.72	€94,644.08	€82,653.12	€69,357.66	€54,663.77
73	€120,765.39	€110,418.10	€99,183.74	€86,697.07	€72,885.02
74	€135,861.07	€126,192.11	€115,714.37	€104,036.48	€91,106.28
75	€150,956.74	€141,966.13	€132,244.99	€121,375.90	€109,327.54
76	€166,052.41	€157,740.14	€148,775.62	€138,715.31	€127,548.79
77	€181,148.09	€173,514.15	€165,306.24	€156,054.73	€145,770.05
78	€196,243.76	€189,288.17	€181,836.86	€173,394.14	€163,991.30
79	€211,339.44	€205,062.18	€198,367.49	€190,733.55	€182,212.56
80	€226,435.11	€220,836.20	€214,898.11	€208,072.97	€200,433.82
81	€241,530.78	€236,610.21	€231,428.74	€225,412.38	€218,655.07
82	€256,626.46	€252,384.22	€247,959.36	€242,751.80	€236,876.33
83	€271,722.13	€268,158.24	€264,489.98	€260,091.21	€255,097.58
84	€286,817.81	€283,932.25	€281,020.61	€277,430.62	€273,318.84
85	€301,913.48	€299,706.27	€297,551.23	€294,770.04	€291,540.10
86	€317,009.15	€315,480.28	€314,081.86	€312,109.45	€309,761.35
87	€332,104.83	€331,254.29	€330,612.48	€329,448.87	€327,982.61
88	€347,200.50	€347,028.31	€347,143.10	€346,788.28	€346,203.86
89​	€362,296.18	€362,802.32	€363,673.73	€364,127.69	€364,425.12

 

[Marsupial]

As a matter of interest, did you factor in the extra €10 a week that pensioners get after they turn 80, in the above tables!

 

[S class]

Is the over age 80 increase a flat 10 euro increase regardless of the portion of the pension a person has ?

Would an 80 year old person with a pension of 100 euro per week get the full 10 euro ?

I don't think the extra 10 euro would change the break even age for a person who would have qualified for full pension at age 66 but decided to deferr until age 70.



There might be a longer break even time if the pensioner was living alone. The living alone allowance is 22 euro per week.

If this person deferred until age 70 they could be at the loss of an extra 22 euro per week for 4 years.

Possible extra 4576 euro loss.

Certain Island dwellers might also have a higher break even age.

 

[Dr Strangelove]

So basically they uprated the basic state pension by €12 a week or 4.3%. But instead of increasing the rates for drawing down at 67-70 by 4.3% they increased them by the same €12 a week. So the rate to delay til 70 is only by up 3.6%.

This results in an increasingly smaller incentive to delay drawdown. The actuarial treatment was already pretty brutal with breakeven rates in the late 80s.

This is either staggering ignorance or a perverse kind cost-saving from the Department of Social Protection.

 

[SquirrelChaser]

This is either staggering ignorance or a perverse kind cost-saving from the Department of Social Protection.

It's not exactly top secret that the government is looking to reduce the cost of pensions. This works by reducing the direct cost, while also increasing revenue by prolonging the working life of the person deferring retirement.

Actuarially nobody should defer. But some people either want to work longer anyway or believe they need a higher income in retirement.

 

[S class]

Actuarially nobody should defer.

People who have less than 2080 Reckonable contributions at age 66 can have shorter break even times which make deferral worthwhile.

There can be major advantages for people who are marginally short of a higher averaging band to defer.

In many cases these people might only need to defer to the 1st January of the year after their 66th birthday to gain a major increase in their pension.

There is also an opportunity for deferers to claim Jobseekers benefit after age 66.

 

[ClubMan]

2025 State Pension (Contributory) Rates (all up €12 weekly)
Break Even age now at 89

	Age when you start to claim	Maximum rate	per year	diff v 66
	Age 66	€289.30	€15,095.67	€0.00

Is this correct?

€289.30 x 53 (to account for the double Xmas payment) = €15,333

 

[Dr Strangelove]

(to account for the double Xmas payment)

Which hasn’t been paid in I think five of the last 20 years.

It’s not a banker.

 

[S class]

This is either staggering ignorance or a perverse kind cost-saving from the Department of Social Protection.

It's stealth erosion.

There are many examples of this.

The 9k transferrable 20% tax band between married couples hasn't been increased.

The age tax credit hasn't been increased.

The household benefits electricity allowance hasn't been increased.

 

[Dr Strangelove]

It's stealth erosion.

I could accept it if there was some rationale (like increasing life expectancy) but it just looks like DSP never liked the option to delay in the first place and are just chipping away at it and hoping no one notices.

Almost no one seems to have noticed it but the state pension contributory has seen an inflation-adjusted decline over the last number of years too:

ear	Weekly Rate (€)	CPI Index Level	Adjusted Weekly Rate (€)
2015	€230.30	100.3	€229.66
2016	€233.30	100.3	€233.30
2017	€236.00	100.7	€234.62
2018	€240.00	101.2	€237.15
2019	€248.30	102.1	€243.01
2020	€248.30	101.8	€243.82
2021	€248.30	104.2	€238.00
2022	€256.30	112.3	€228.77
2023	€265.30	119.4	€222.78
2024	€277.30	122.5 (11 months)	€226.36

 

[ClubMan]

Which hasn’t been paid in I think five of the last 20 years.

It’s not a banker.

Ok, I thought that it was paid every Xmas.

But 52 x €289.30 = €15,044 which is still different to what's in the previous table.

 

[Ruffian]

Just as well break even point is reached before 100 or we'd have to factor in the Centenarian Bounty.

 

[Dr Strangelove]

Ok, I thought that it was paid every Xmas.

It’s at the discretion of the government of the day.

It wasn’t paid during the austerity years and pandemic IIRC.

 

[S class]

Almost no one seems to have noticed it but the state pension contributory has seen an inflation-adjusted decline over the last number of years too:

Very few people notice.

Our education system churns out people who are experts in theoretical mathematics.

These people are generally clueless about practical mathematics.
They don't understand the basics of personal finance, taxation, inflation etc.

This majorly of the population are easily fooled by the government.

Practical mathematics. financial planning and all aspects of money handling should be taught in our schools as a separate subject.