Trying to figure out what age I can retire at

I am currently 40 years old. I would like to retire as soon as I possibly can. I have a mortgage that should be paid off in the next 10-12 years so I don't expect to retire before then. I currently have ~200k in my pension and contribute 3k p/m between my own and employer contributions. A compound interest calculator tells me this should have me at about 2m in the pension by the time I'm ~60, it sounds like that would be sufficient but ideally I'd like to retire before 60 if it is feasible.

Where I am confused is when it comes to taking an ARF vs an annuity. My understanding is with an ARF you keep your pension invested and draw down a certain % of it each year (I think I've read 4-5% per year?). Basically I am wondering how you can generally tell you have enough to retire on? Is there a calculator you can plug these figures into, if I have X in my pension pot, draw down Y% per year, but expect growth of Z% on an ARF? I have googled it but haven't found anything, hence the thread. Is it worth going to a financial or pensions advisor? I don't know enough about pensions to know how to approach this but would like to have a target in my head for retirement, thanks.

Great question. A pot of €2m will give you lots of flexibility and hopefully a good standard of living. I believe that certain financial advisors have the software to forecast net income over retirement for a client but as they pay for the software you may need to pay for that service. It might help ease your mind and validate your hopes. There is no solution that is guaranteed accurate as there are so many variables eg we don’t know what income tax rules will apply when you retire or what the state pension will be.

My home made approach has been to model it via a spreadsheet calculating forecast gross income by start date. For example your private pension might begin at age 56 and the state pension 10 years later. If you have other income sources add them too.

If you buy an ARF you can dictate the drawdown level (4/5/6% etc) so that you have the income you want or need. You won’t have that with an annuity. You can start the drawdown level high and reduce it later as other income streams are received. That approach could mean you run out of money sooner though. ARF drawdowns are subject to a minimum of 4% from the tax year you reach age 61 rising to 5% at age 71.

This Zurich calculator is a simple drawdown model that could help you picture how quickly you might run out of money ….or not ….with an ARF.


This is one of several income tax calculators you can use to work out your net income. They get updated every year after the budget so they won’t be accurate into the future.

The first, and most critical, thing to figure out is your “burn rate” - what will you spend per annum in retirement?

Once you figure out that figure, multiply by 30 and that’s your “number” for early retirement.

So, if you reckon you could live comfortably on €40k per annum, you would need total retirement savings of €1.2m.

Now, you can get into the weeds and start modelling for future taxes and social welfare payments but for planning purposes I think a 30X figure is a good enough starting point.

If you would like us to comment on whether you are on track for early retirement, I think we would need to see your details in a “Money Makeover” format.

If you really want to nerd out on this stuff, there's a book worth of blog posts on Safe Withdrawal Rates at EarlyRetirementNow as well as a Google Sheets calculator where you can fill in your own circumstances and see how they work out. It is US-focused though, but I think it's close enough for what you need if you just consider EUR/USD to be 1:1.

Generally, you'll find 3.35% or so per annum would have gotten you through an early retirement (40+ years) without running out of money in all historic circumstances. You can actually plug in fixed income (Contributory Old Age Pension, etc.) on ERN's google sheet and see how that increases the safe withdrawal rate.

If you're just looking for a ballpark, assuming you'll have all/most of COAP from age 66, then 4% is a good guide.

Sarenco said:

Once you figure out that figure, multiply by 30 and that’s your “number” for early retirement.

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Can you clarify where the 30 figure comes from? It's not obvious to me. Thanks.

ClubMan said:

Can you clarify where the 30 figure comes from? It's not obvious to me. Thanks.

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Average 30 year life expectancy after retirement?

@ClubMan

The 30X figure is simply another way of expressing a 3.33%, inflation-adjusted, “safe” withdrawal rate, as referenced by @conor_mc above.

It gives you a good ballpark number for determining how much is “enough” to retire early with a degree of confidence that you won’t run out of money before you run out of life.

Incidentally, I think a 25X figure is fine for somebody retiring at the conventional age of 65.

TRS30 said:

Average 30 year life expectancy after retirement?

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Yes, but...

lemonadefishing said:

I am currently 40 years old. I would like to retire as soon as I possibly can. I have a mortgage that should be paid off in the next 10-12 years so I don't expect to retire before then.

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Sarenco said:

The 30X figure is simply another way of expressing a 3.33%, inflation-adjusted, “safe” withdrawal rate, as referenced by @conor_mc above.

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Ok, thanks for the explanation. Is this a variant on the common 4% drawdown rule (of thumb)?

For the avoidance of doubt, the 30X figure has absolutely nothing to do with average life expectancy.

The 4% rule of thumb is fine for somebody retiring at the conventional age of 65 but it’s too risky for somebody retiring in their 50’s or earlier.

Once you figure out that figure, multiply by 30 and that’s your “number” for early retirement.

Is that accurate. I expect by the time you are 90 you outgoings are minimal. Most expenditure will be in early days of retirement

Not necessarily.

Expenditure in retirement often follows a “smile pattern” where it starts relatively high, gradually falls and then gradually starts to rise again.

Bear in mind that health care costs typically rise as we age.

But for the purposes of deciding whether not you have “enough” to retire early, it’s fine to use an average projected annual expenditure figure.

You can retire now if you want. You just won't have as much income for the next few decades. This is Ireland, you won't starve

More conservatively, you can walk when the mortgage is paid off.

You can semi-retire by working part of the year and/or part of the week whenever you find a job that allows you.

You can work full-time until you're 70 or later. Someone in my job retired recently at 70. I saw something recently about a guy who's just retired at 84 after 65 years in the same company.

For most people employment is a tradeoff between time and money. You need to decide which you value more. Personally I intend to cut down to 10 months a year (currently at 11) as soon as my mortgage is repaid at age 50. I'll drop to 9 months at 55, and leave at 60. Worst case scenario I'll work 9 months of the year and 3 or 4 days a week until I'm 66. I won't be rich in retirement, but i expect to be quite comfortable- although my version of comfortable may be your version of indigent.

What a bizarre post.

If the OP retired now, how is he supposed to pay his mortgage? What is he supposed to live on?

Calculator.net has a simple retirement calculator you can try out. Eg with guessed figures below shows you are on track for 60, however this will change year to year as your fund grows and you have good and bad years of return, I.e it’s only at 55/56/57 where you will be able to see can you go then, it’s hard to see a result that would let you retire comfortably with 5 years less returns, 5 years less input into pension and 5 years more to live for example

@Sarenco

You didn't really get the point of employment being a tradeoff of time vs money did you? I was highlighting points along the spectrum- I personally have always pitied the live-to-work crew though.

Also, you've presumably heard of social welfare etc.

Working for profit - not limited to employment - is always a trade off between time and money. Hardly a profound statement.

However, telling somebody with a mortgage and no other source of income that they can retire now is just bonkers.

If you want to work part time until you are 66 (or whatever), that’s obviously your choice.

But it is of zero assistance in answering the OP’s perfectly reasonable question.

According to your OP you're 20 years away from a retirement pot of €2 million, that should be for most people more then enough to retire on
But I'm gathering from your post you'd like to retire a good 5 years before that, what's the projected retirement pot then,
I'm sure it would still be more then enough for most people

But the only way you will know if it's enough for you, is as Sarenco suggests, is to figure out what your "burn rate" is going to be or what you will spend each and every year in your retirement and the simplest way to do that now and over the the next 15 years is to track your spending

Obviously we don't know our check-out date, I personally know of one married couple in their 100's which is very much the exception,
I also known lots of people who don't make it past a couple of years or retirement if they even got there!!
So I also think like Sarenco that the 30 year multiplier is a good rule of thumb for calculating the sum needed

But one thing to be aware of when arriving at that figure, each and every year is going to be different regarding your expenditure
The general thinking is that you will spend more at the beginning and less at the end so you might not need as much as you think you need

lemonadefishing said:

A compound interest calculator tells me this should have me at about 2m in the pension by the time I'm ~60, it sounds like that would be sufficient but ideally I'd like to retire before 60 if it is feasible.

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Alot of people were thinking like that around 2006/7 , I have all these investments and pension pot so that should allow me to retire in a few years. The financial crash came around decimated investments and pension pots ( the state also stuck their hands in aswell to grab some pension cash) . It took a decade at least for that to unwind and get back to even. So events dear boy can decimated the best laid plans.

Also I wonder how people that made that decision in say 2019 or 2020 before the COVID inflation doing now, their budget and spend rate must be under severe pressure given that they would have worked out prices and spending based on the low inflation and relatively low priced we had back then

Above, someone posted it can get more expensive again towards the end. Can VHI raise their annual rate as you get older because you are older? I'm wondering where the extra cost come from - is it maybe home care, that kind of thing?

I'd like to leave house (and more if possible) to kids, but I am also not willing to "sacrifice" retirement treats and comfort for their benefit. So, in the back of my head, I always have the house trade down or equity release as an option to fund any deficit I might find myself in, while planning on the 30x pot or thereabouts.

@Sarenco

Unless there's a money makeover thread for the OP that I've missed, you've no more clue of what their total assets & income are than I do. It'd hardly be unusual on this forum for someone to post a money makeover showing they've cash equal or greater to their outstanding mortgage. We know their age, their monthly pension contributions including employer contributions, their current pension pot, and how long they expect to take to pay off their mortgage and that's it. They might have 80% equity and small monthly repayments or they could have 15% equity and they're throwing every penny at the mortgage. They could have a million euro in the bank, or nothing. So on and so forth, etc etc.

• We can make some reasonable assumptions based on the details actually provided. With €3k a month in pension contributions they probably have a high paying job. With a high paying job they probably bought a home at significantly higher than average price. With 10-12 years left to repay the mortgage they probably bought 5-10 years ago at least and have a good bit of equity in their home. But all those assumptions may be completely wrong depending on the OP's exact financial situation.

None of which is actually relevant to the OP's stated goal: "I would like to retire as soon as I possibly can." It sounds relevant, but it's really not.

The OP can retire immediately at whatever point in time they feel they have enough. Enough might mean €5 million in assets on top of a €2million mansion in a leafy suburb of Dublin, or it might mean social welfare payments in a €100k cottage in Mayo, or even social housing somewhere.

At one end of the spectrum the OP decides they can do OK entirely on social welfare, then game on for emailing a resignation letter to HR by close of business today. At the other end of the spectrum they might never feel satisfied or secure with the wealth they've accumulated and might drop dead on the job well past normal retirement age. I can think of people at both ends of that spectrum, but most people are obviously towards the centre.

Throwing around figures like 30x their burn rate is meaningless in isolation considering their probable entitlement to social welfare including OAP. (It's one of those multipliers which seems to have been imported from the US where by most accounts starving to death on the streets is a significant risk due to the highly individualistic culture). €15k of a COAP is very relevant to most people's calculations.

The OP might decide they're a hippie, or they may discover they have the soul of a Ferengi. None of us can tell them that. Only the OP can decide who they are and what "enough" means to them.