Are you one of the 60% of workers in Ireland who would retire at the age of 50 or 60 if you could afford it*?
On this page, you’ll discover what early retirement in Ireland means, how it could affect your pension, and how much you might be able to retire on. We’ll also look at steps you can take today to improve your chances of retiring early, like setting up a high-interest savings account.
Early retirement options: Depending on your employment contract, health situation, and pension type, you will be able to retire from as early as 50 or 60
Early pension access: After taking early retirement in Ireland, you might be able to access up to 25% of your pension fund as a tax-free lump sum
Planning for early retirement: You can take steps to prepare for early retirement by creating a budget, reviewing savings strategies, and exploring competitive savings accounts through Raisin Bank
Early retirement means stepping away from work before you reach the average retirement age, usually around 65. The early retirement age in Ireland can range from 50 to 65. This could be because your job mandates retirement at a certain age, or because you choose to retire early, or even if you’ve been let go unexpectedly.
If you retire early without planning for it, it can put extra pressure on your retirement savings, since you’ll need them to last for a longer period of time.
In Ireland, many employment contracts set a retirement age, typically around 65. However, some employers allow for early retirement, giving you the option to stop working at 60 or even as early as 55. What’s more, early retirement in the public sector has different rules to the private sector. So if you’re wondering how early you can retire, a first step might be to check your employment terms to see what’s possible for you.
You might also be a follower of the Financial Independence Retire Early (FIRE) movement, which suggests that by aggressively saving and investing, you could retire as early as your 40s.
Regardless of your retirement goals, it’s worth considering your options. In certain cases, you may be able to access your pension benefits before reaching the minimum pension age.
Sometimes, early retirement isn’t a choice you make, but a decision taken out of your hands if you become ill while still employed. If you’re under 66 and are unable to work, you can apply for Illness Benefit, which is calculated based on your PRSI contributions.
If you’re in this situation, you may also be thinking about early retirement due to ill health. This option allows you to receive your pension immediately, and in some cases, you may even receive “notional added years.” These are additional years credited to your pension record, even though you didn’t actually work them.
Keep in mind that the option of early retirement due to ill health varies by pension scheme. In a defined benefit scheme, you may receive full benefits at normal retirement age, providing immediate financial support. However, in a defined contribution scheme or personal pension plan, retiring early could reduce your annual income.
Cost-Neutral Early Retirement (CNER) is a way for public servants to retire early in Ireland and get their pension before their “preserved” (standard) pension age, which is typically 60 or 65. Under this arrangement, eligible employees can retire between the ages of 50 and 60, depending on when they started working. The pension amount will then be reduced to account for the early payment and longer payment duration.
To be eligible for CNER, you have to meet certain requirements. Firstly, you should be working for a public service organisation and be a member of their pension scheme. CNER is an option open to most standard public servants, including teachers, nurses, and clerical officers. Secondly, you must have the right to receive your pension at either age 60 or 65, depending on your scheme. Finally, you should have applied for CNER and completed the HSE early retirement form before you retire.
If you’re considering early retirement in Ireland, you may be wondering whether you can cash in a pension early. The main requirement is that you must have left the job where you built up your pension. Also, you must have been employed in the private sector.
The rules for early access to pensions vary depending on the type of pension scheme you have:
With most pension schemes, you can access up to 25% (up to a maximum of €200,000) of your pension fund as a tax-free lump sum, but income tax applies to the rest. Occupational pension schemes let you take a lump sum based on your salary and years of service.
After taking a lump sum from your pension upon retirement, you have options such as paying for an annuity or transferring the rest of your pension into an Approved Retirement Fund (ARF). An annuity offers payments over a specific period of time, providing a guaranteed income stream. On the other hand, an ARF can provide more flexibility in managing retirement funds compared to traditional pension schemes or annuities.
You might find it helpful to get advice from a financial advisor to understand the specific rules around early pension withdrawal in Ireland and what it would mean for you.
Taking early retirement is a big decision, and it can be helpful to weigh up the pros and cons. While the idea of more free time might be appealing, it’s important to keep in mind that retiring early could drain your savings faster than if you waited until later, closer to the state pension age. So, it’s not a decision to rush into.
Deciding whether to take early retirement is a highly personal choice, and there are several aspects to consider. You might start by thinking about how you plan to live your life as you age, and whether your savings will be enough to sustain that lifestyle. Looking ahead, you might also factor in unexpected expenses, healthcare costs, and inflation over a potentially longer retirement period.
Ultimately, only you can decide if early retirement is right for you, but by carefully considering and planning for it, you’re more likely to ensure your future financial security.
If you’re considering early retirement, you might firstly consult your pension provider for precise details on exactly how your pension fund would be affected. Taking early retirement in Ireland without continued employment may create PRSI contribution gaps, impacting your entitlement to the state pension. However, you might be able to bridge this gap by obtaining credits or making voluntary contributions, so you would still qualify for the state pension.
There are some useful tools like pension calculators to calculate whether you are on track to meet your target pension payment based on your current contributions and the age at which you are aiming to retire.
If you choose to retire early in Ireland, you might still qualify for jobseeker’s benefit or jobseeker’s allowance, and you could also take advantage of back to work or back to education schemes. However, you may face a slight delay to your payment after leaving work if you choose early retirement.
Because the rules around eligibility vary based on individual situations, it’s helpful to get in touch with your local social welfare office or a financial advisor.
Here are some ways you might begin your journey towards early retirement in Ireland:
If you’re considering early retirement in Ireland and looking for ways to boost your savings, consider signing up for a Raisin Account. With a variety of partner banks offering attractive rates on savings accounts, including fixed term deposit accounts and demand deposit accounts, you have plenty of choices to meet your financial goals.
Once you’re registered, simply log in to apply for free in just a few clicks.
*https://www.independent.ie/business/personal-finance/only-one-in-three-irish-workers-can-afford-to-retire-at-66-and-most-expect-to-work-until-70-survey-finds/a554762606.html
What is early retirement?
How to retire early in Ireland
Can I cash in my pension early in Ireland?
Is early retirement right for me?
How will my pension be affected if I take early retirement?
Can you collect unemployment if you take early retirement?
How can I prepare for early retirement?
Start saving with Raisin Bank
What is early retirement?
How to retire early in Ireland
Can I cash in my pension early in Ireland?
Is early retirement right for me?
How will my pension be affected if I take early retirement?
Can you collect unemployment if you take early retirement?
How can I prepare for early retirement?
Start saving with Raisin Bank