Plan to retire 2026, considering bringing it forward to this year.

AppleVenus

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9
I'd appreciate an objective perspective on our situation.

Personal details
Your age: 59 Your spouse's age: 61
Number and age of children: All over 25. None at home.
We are married

Income and expenditure
Annual gross income from employment or profession: 2024 €191k
Annual gross income of spouse/partner: 2024 €115k

Monthly take-home pay: €8,800 [miscalculated in my original post]
Takehome pay is net of AVCs (I am maximising and my partner is now increasing each month until they reach the maximum %)
Also net of contributing to company employee purchase share schemes which we use a form of saving by selling the shares each quarter paying the BIK and putting the cash into house improvements or paying for holidays.

Type of employment: both private sector employees.

We are saving.

Summary of Assets and Liabilities
Family home value: €1.1M conservative valuation (neighbour house sold for €1.25M this year)
Mortgage on family home: none

Cash: €30,000
Credit Union Shares: €4,000
Company shares : approx €30,000 [holding as they are 'under water', plan is to put a limit order and sell when they recover their value]

Other borrowings: Car loan with credit union. Outstanding balance is €13,000. [plan is to clear this in the next few weeks - no point in paying interest]

Do you pay off your full credit card balance each month? Yes. We rarely use credit card.

Pension information
Value of pension fund: €920k (mine) €150k (partner)
I've reviewed our statements and we are on track to having the 2,080 contributions/credits needed to receive the maximum contributory state pension. [We will have enough from current statement + homemaker + credits from years in the US + credits between now and age 66 for both of us to hit 2,080. ] I have read the helpful information here on keeping our PRSI contributions going until we retire to ensure we qualify for full contributory state pension.

Other savings and investments: none

Other information which might be relevant
Partner will receive an inheritance in region of €350k-€450k in the next couple of years [this is based on very conservative market value of a parents house so is anticipated, without going into too much detail this is inevitable in the next few months].
We will be spending approximately €30,000 on home energy improvements this year and intend to minimise borrowing to do that paying cash where possible. We will want, at some point in the future, to spend approximately €30,000 to €50,000 on other home improvement projects but none that are urgent.

What specific question do you have or what issues are of concern to you?

Trying to be as smart as possible about jumping to retirement. Neither of us grew up with money and recognising our very fortunate position is an unfamiliar place to be. We will retire together. Our plan is to retire in autumn 2026 and live off ARF topping it up with lump sum as needed until state pension kicks in.
We will be 60 and 63 respectively at that time. But we are running out of patience with working life and are very tempted to retire this year. All of the usual life events have reminded us that time is precious and health is not guaranteed forever.

My hesitancy is driven by coming to terms with the switch from a comfortable income to managing with a lower income and frankly I had never thought we could be in this position. I assumed we would both need to work until 66. I also want to make sure we are taking full advantage of our income while we are both working.

I expect recommendations to address investments as cash will lose value. It is something we will consider in the future but right now we prefer to get our home improvements completed. We'll look at diversifying our assets when we have the pension lump sums and my partner's inheritance.

My questions:
1. Are we overlooking any opportunities while we have this level of income available between now and autumn 2026?
2. If we decide to retire this autumn vs autumn 2026 what are we missing out on? We think it's only my partner's additional AVC contributions to maximise their tax free pension lump sum amount.
 
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AppleVenus said:
Cash: €30,000
Credit Union Shares: €4,000
Company shares : approx €30,000

Other borrowings: Car loan with credit union. Outstanding balance is €13,000.
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Not the biggest issue here but this doesn't make sense. Borrowing when you don't need to. And probably at rate inflated above the headline rate when you factor in the cost of keeping €4K in CU shares while borrowing €13K from them.

Also not liquidating shares in your employer is questionable from a diversification/risk point of view as you're putting two eggs in one basket - your remuneration and some of your investments.
AppleVenus said:
Income and expenditure
Annual gross income from employment or profession: 2024 €191k
Annual gross income of spouse/partner: 2024 €115k

Monthly take-home pay: €8,500
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On a combined houshold income of €300K your savings seem very meagre.
And as far as I can see your net household income should be more like €15K p.m. before pension contributions...


Edit: sorry - I see that this is already addressed in the original post:

Are both of you likely to hit the 2,080 PRSI contributions/credits to qualify for the full state contributory pension from age 66 or later if you defer it for a slightly higher payment?
 
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Perhaps you would should consider estimating likely weekly spending in retirement.

What’s happening the €8,500 take home pay?
How much is being saved saved/spent?
I would have expected more savings.

Will you live in this house forever? Would you ever consider downsizing? Probably not, given the planned improvements.

However, you have excellent equity.
 
A few more questions!

What is your current “burn rate”? In other words, what are you currently spending per annum. Given your high take home pay and relatively modest after-tax savings, I suspect your lifestyle is not particularly frugal.

As regards the anticipated inheritance, is that a working assumption or is there a specific bequest that’s currently going through probate?

Do you intend to see out your days in your current home or is there a possibility that you might trade down to a smaller, more energy efficient home?
 
These are great questions. I'll update the original post as needed. I'm limited to how many replies I can make per hour.

Car loan: we plan to clear that car loan in a few weeks - I agree it doesn't make sense to pay interest when we don't need to. After the mortgage it was the last remaining debt.

Employer shares are 'under water' so we will put limit orders on them and sell when they recover their value. Those are my partners employer shares. I no longer hold my employer shares.

We are on track to hit the 2080 PRSI contributions/credits yes. I'll make that clearer in my post.

Yes, I'm looking at burn rate and estimated weekly spending in retirement. I'll revisit that spreadsheet to ensure I'm not overlooking anything. I've modelled our expenditure pre and post retirement (removing second car, adding health insurance etc). The taxcalc model is really useful. I'm going to dig into that to better understand the gap between our takehome and the taxcalc. I can see from payslips that employee stock purchase, AVCs will address a lot of that gap but I'll get a little more forensic now.

Savings are indicative of how long we've been actually able to save: our focus has been paying off mortgage and helping kids getting setup. The €30,000 represents a short term of weeks not years.

We plan to stay in this home. If we had to we'd consider downsizing but we have a great quality of life here.
 
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Congratulation on what you have achieved. Overall you appear to be in pretty good shape and can hopefully look forward to a comfortable retirement.

A few thoughts, questions:

Are you sure that you are maxing out your pension contributions. I've seen people assume that the age related pension contribution % relates to salary, whereas revenue actually allow this to be calculated based on Net Relevant Earnings including salary, bonuses and value of many benefits in kind including many allowances. The difference can be significant.

Your house is a large part of your equity. Have you considered whether or not it will be appropriate and comfortable in 25 years time ? My parents left it too late to downsize and my very elderly mother is now rattling around in a large house that cost a fortune to heat, and given that she has outlived all the neighbours the original justification for retaining it is long gone. This is a very personal decision, but trading down now would release a lot of equity which you could enjoy while you are young and active and allow you to put down roots in your new abode.

A few other posters have mentioned "crunching the numbers" and I'd urge you to do this. It brings two benefits, allowing you to understand and evaluate your current expenditure and shape and project your future expenditure, and secondly it will give you much greater confidence in the future (answering your concern/doubts expressed when you say "My hesitancy is driven by coming to terms with the switch from a comfortable income to managing with a lower income and frankly I had never thought we could be in this position. I assumed we would both need to work until 66"). You will learn a lot about yourselves by doing this, you'll be able to decide what is important and what can be allowed to fall by the wayside and you will be able to plan your future with confidence.

I retired when I reached 60, a decision I haven't once regretted. My income now is a fraction of what I once earned but still more than adequate for my needs and wants, my standard of living is still very very good and my quality of life has never been better. For sure, some of the "luxuries" I enjoyed when working such as regularly changing cars (prestige marques), regularly eating in top end restaurants and spending money without giving it a second thought have been reigned in, but I always knew that that stuff was transitory and managed my expectations accordingly.

One last point, regarding the timing of your retirement, I've discussed this with a number of peers over the years and the consensus is that retiring in March/April is optimal - you face into the long bright sunny days rather than the dark days of winter. Again a personal thing, and there are many considerations, but worth thinking about.

Best of luck whatever you decide.
 
On their salaries they are already beyond the 115k limit - but interested to understand if I am missing something here?
 
Just to note that one or both individuals here are probably going to be subject to the €115K cap.

Taxation of pensions

This page describe how pensions are taxed
www.revenue.ie
Tax relief is granted according to your age-related factor and subject to the earnings threshold of €115,000.
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Edit: I see that @NotPoodle has already pointed this out.
 
Yes, sorry, I didn't account for the pension contributions but it's worth sanity checking your figures. I'm not sure if the pension contributions would account for the €7K difference between your net income figures and the one that I mentioned? Also worth making sure that your tax credits etc are all up to date and correct for 2025 and the previous 4 tax years.
 
AppleVenus said:
Income and expenditure
Annual gross income from employment or profession: 2024 €191k
Annual gross income of spouse/partner: 2024 €115k

Monthly take-home pay: €8,500
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Just teasing this out:

Gross income:
  • Spouse #1: €191K
  • Spouse #2: €115K
Maximum pension tax relief limits:
  • Spouse #1 (aged 59): €115K x 35% =~ €40K
  • Spouse #2 (aged 61): €115K x 40% = €46K
Taxable gross:
  • Spouse #1: €191K - €40K = €151K
  • Spouse #2: €115K - €46K = €69K
Plugging the figures into the calculator...


I still get a household net income of c. €11K p.m.

Is employee stock purchase actually making up the difference between that and €8.5K?
 
Small point but Spouse 1 may be entitled to 40% if they are in their 60th year (i.e. currently age 59 but 60th birthday occurs between now and end of year)
 
@AppleVenus

Thanks for the clarifications.

Including the anticipated inheritance, it looks like you will have approximately €1.5m to fund your retirement.

At a high level, I think that should comfortably support an annual spending level of €50k.

Yes, your pension drawdowns will be taxable (other than any tax-free lump sums) but that should be more than offset by the State pensions.

I would have thought that a budget of €50k would support a pretty comfortable lifestyle for most couples.

But only you can know for sure whether it would comfortably support your lifestyle.
 
ClubMan said:
I still get a household net income of c. €11K p.m.
Is employee stock purchase actually making up the difference between that and €8.5K?
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Yes, I'm comfortable with the gap between the takehome & the additional AVCs & employee stock purchase. I've plugged this all into spreadsheet and can see wher the gap between the actual takehome and the takehome without AVCs & ESP applied.


100% agree. This discussion has focused my mind on getting into the detail and properly understand. I already have line items in my spreadsheet which will be terminated on retirement, some are already being questioned pre-retirement.


This gets to the heart of my original questions and one for the retirement subforum. I'd say we are only in the last year becoming accustomed to not having to think twice about spending money. We're not flamboyant or wasteful by any stretch of the imagination.
Without going too much into the detail we've been carrying costs and necessary exependiture for a number of years which we no longer have to do. This really limited our ability to save. Saving is something that has really only materialised in the last few months.
Sarenco said:
What is your current “burn rate”? In other words, what are you currently spending per annum. Given your high take home pay and relatively modest after-tax savings, I suspect your lifestyle is not particularly frugal.
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Great question and good point. I've been working on that and this discussion has caused me to re-examine it all. We have really only been in a position to save since the last 3 months of 2024 so between what we've spent on home improvements, holiday and savings I think €30,000 is not a bad return for what is a few weeks effort.

Freelance said:
Small point but Spouse 1 may be entitled to 40% if they are in their 60th year (i.e. currently age 59 but 60th birthday occurs between now and end of year)
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Small but valid point. Not in that year yet so can't go to 40%. It's a consideration for hanging on one more year. I'll have to model what that might look like and the benefit it brings to our pension pot. We're pushing to 40% through my partner's AVCs. We see the value in that as they've got plenty of opportunity left in the tax-free lump sum when we do eventually pull the trigger.

The multiple questions on staying in the family home are valid but it's horses for courses. We really like where we live and have all of the essential ameneties and excellent public transport at our doorstep. We'd never rule out downsizing but if we can keep the running cost of a family-size home within our means by investing now we are happy to do that. Just as folk can't wait to buy a place in the sun we're happy with the place in the rain (but can't wait to hit the interrail network for weeks on end !).

To answer my own original questions: I can probably model the impact of 1 more year of pension contributions (particularly given my ability to go to 40% as noted above) then see how what that translates to in terms of income over 25+ years.

Very much appreciate the responses on this as it has given us both good food for thought and a reminder to re-examine our current and projected running costs.....
 
One quick point - I’m not sure that you get Irish pension credits for the time spent in the US. I spent 5 years working in the US and as far as I can understand it, your Irish work can be used to meet the minimum requirement of 10 years for a partial SS pension from the US, but doesn’t increase Irish pension.

There has been a recent change in the rules in the US (windfall provision) which seems to be favourable.

It is hard to find information on what the level of payment from US social security would be.

Very interested to hear your understanding of this as I might be missing something.
 
If you want to model the impact of one-more-year, then highly recommend EarlyRetirementNow’s Safe Withdrawal Rate series with Google Sheets calculator.

FWIW, I think this is a peaky moment in the markets and significant corrections early in retirement are the #1 cause of running out of money - sequence of returns risk. Blog above discusses and tests many ideas to mitigate SoRR with every monthly cohort of retirees going back 100+ years. US-based, but good enough for guidance imo.

If I was you, I’d take one more year, live that year on your retirement budget (say 4% of your 920+150+350). If you’re comfortable with that level of expenditure then you’re good to go but with a cushion of a year’s additional contributions/savings in your back pocket to cover the big upcoming spends on home improvements.

Finally, think you’ve got it covered but a 10k investment in aolar PV plus battery should net you an inflation-adjusting €1500 a year for the rest of your lives, give or take. A similar annuity would cost 40k or so…. best retirement investment into “fixed income” can make imo.
 
Hi, it is my understanding that it’s “either or” between US and Irish pension (claim in one country and the gap years are credited from the other country) so the years we spent in the US are reciprocated as 52 week’s contributions in Ireland. In the event that this is incorrect or changes we will have enough years until age 66 to bridge a US gap.


This is a great idea and I wish I had thought of it. We’ve discussed it and are going to start April 1st (so I can measure & track it easily).

We have SolarPV and battery installed and they have paid for themselves. I’ve modelled the ROI from adding a second battery and will be doing that this year. We expect good ROI from efficiency improvements which wouldn’t have been practical with (adult) children and others living in our home. Energy costs will only increase so now is the time with an empty nest to get all that dusty work done.

I have a question for those who understand these things: if I want to estimated the benefit of an additional year income to our pension pot I could use a 4% rule of thumb for the annual pension return. So let’s say I contribute 10,000/year to my pension the return from that will be 400 a year gross. Is that a good rule of thumb?
 
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