Early Retirement Conundrums

S

sidzer

Registered User
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Hi all,
I have been working towards early retirement for the last few years.

I am a teacher age 54 and will hit the top of the salary scale on my next birthday in January -€78,390.

I am considering going in 3 or 4 more school years after this year (retiring in September 2027 or September 2028). I will have a pension from a previous employment as well as my teachers pension and I have AVC which will bridge the gap until age 60 when I can claim the supplementary pension.

My figures for age 57 will be a pension of €41,303 and using the PWC tax calculator this would give me a weekly income of €657

My figures for age 58 will be a pension of €44,585 and using the PWC tax calculator this would give me a weekly income of €693

This is just €36 extra a week for working a whole extra year.

I am currently paying a lot of money into NPS and AVC (30% of my gross) so currently my weekly pay is €650.


Just looking for opinions - would I be mad to put in another years work for just €36 a week more on my pension?

The lump sum would be worth €7668 more at age 58.

Thanks
 
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It's not just €36 pension. It's also €80k in salary and one year fewer of a gap to bridge. That said I'm retirement minded and will do so myself as soon as is practical. I wouldn't work an extra year if I didn't need to. In your situation I would line everything up for retirement in 3 years and make the final call close to that time whether or not to extend for one more year.
 
Maybe ask this way - work one more year to gain €1,872 extra every year for life - which is €56,160 over , say, 30 years from age 58. ?
Do you think that is worth it?
 
It might be worth focussing on the bigger picture rather than just the 36 per week. Your life expectancy is 25 years plus. So the 1 more year is @78K + (36x52x25) - 41303 = 83497. Whether that's worth it or not depends on how wealthy you are now and what you want to do with retirement. If you're not that wealthy and want to travel a lot that 83k would make a massive difference to your retirement! If you have earnt/inherited wealth and a lower life expectancy then time is more valuable etc.
 
Also depending on when you retire, you would get the benefit of any pay increase in the lump sum.

The increase in lump sum is tax free as well.
 
Thanks for all the replies above.

I really like the plan for 3 years and then decide if I want to do another year or two.

I do like travel and hope to go on a few skiing trips each year while I still can.

Much appreciated - Thanks
 
redstar said:
Maybe ask this way - work one more year to gain €1,872 extra every year for life - which is €56,160 over , say, 30 years from age 58. ?
Do you think that is worth it?
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A question I find useful is how many people have I known who lived until they were 88.
 
2 things to check:

1. There is an old deal for teachers where 2 training years counted towards pension and retirement, so can go at 58 with no acturial reduction I believe.
2. I heard if you retire early with an actuarial reduction, you do not get the supplementary pension, so won't get the SPC part until normal pension age of 66
 
TheJackal said:
2 things to check:

1. There is an old deal for teachers where 2 training years counted towards pension and retirement, so can go at 58 with no acturial reduction I believe.
2. I heard if you retire early with an actuarial reduction, you do not get the supplementary pension, so won't get the SPC part until normal pension age of 66
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Thanks Jackal - 2 very important considerations to investigate.
 
For pre 95 entrants you can retire without actuarial reduction from age 55 with 34 years service (teachers with 3 year pre service qualification credited with 1 year) and 33 years service (for teachers who have 4 years of more pre service qualification). As far as I know this doesn't apply to entrants after 1995.
 
Thanks Threadser - that is my understanding too. And you can't use NPS years to try to qualify for this.

My concern would be if early retirement would mean not being able to get my supplementary pension until 66 instead of 60. If would be madness to retire 2 or 3 years early if the supplementary pension was pushed out to 66 as a consequences. But this is from the dept pension modeller and would seem to suggest that it is payable from age 60.

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sidzer said:
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The rules around the supplementary pension seem to be very unclear. Maybe it might be an idea to contact your union (if you are a member) and see could the officials there clarify it for you. I am also investigating retirement options from teaching but luckily I am in the pre 95 cohort and the calculations are a bit more straightforward. Best of luck with it all!
 
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