Pension calculators in Ireland

As you approach retirement age, you might be wondering whether you’re saving enough money for your later years. This is where pension calculators come in - a tool for forecasting whether your financial contributions are enough to meet the level of retirement income you’re aiming for.

On this page, we’ll look at what Irish pension calculators are, how they work, and how they can help you work out the best savings amount for your retirement years.

In Ireland, a pension calculator can be a useful tool for estimating your retirement income. The calculation is based on factors like how big your current pension pot is, your annual pension contributions, and the number of years left until your desired or mandated retirement age. 

You might also need to specify how much your employer pays into your pension, especially if you’re part of a defined benefit pension scheme. A defined benefit pension calculator can help you to see whether you’re saving enough to meet your retirement income goals. 

A pension calculator also helps you work out how many more contributions you will need to reach your desired retirement income. These calculators are essentially pension pot estimators that you can use to start planning early for a comfortable retirement.

A pension calculator in Ireland usually requires you to enter your age, annual salary, desired retirement age, and the percentage of your salary you want to receive as pension. It will also ask if you are currently enrolled in a pension scheme.

When it comes to your desired pension amount, some pension calculators will assume you qualify for the full state pension, while others will ask if you qualify and then factor that into the calculation for you. Public sector workers, such as teachers or civil servants, might find HSE pension calculators more useful, as they cater to the specific pension calculations for those professions. Some Irish pension calculators also estimate the pension lump sum that comes on top of the weekly pension, which is particularly relevant for teachers’ pensions.

When calculating pensions in Ireland, there’s a wide choice of online calculators available. However, before you get started, consider contacting your pension scheme provider to find out if you qualify for additional benefits like housing or income support. These could impact your pension pot once you’ve entered retirement, so it’s important to factor them into your calculations.

Keep in mind that retirement calculators offer pension estimates, not guarantees, as they are based on certain assumptions. While these assumptions generally align with most pension schemes, it’s important to remember that rules vary between schemes. Private pension plans differ slightly from company pension schemes, and individual terms may vary even among similar plans. For instance, with a personal pension plan like a PRSA, each contribution comes with a charge of up to 5%. In these cases, you might opt for a private pension calculator tailored to the terms of these schemes.

When using Irish pension calculators, keep in mind that they’re generally meant for illustrative purposes. Some pensions may be subject to tax, although this is often not fully accounted for in retirement calculators. In reality, tax relief depends on factors such as income tax rate, age, and conditions set by the Revenue. 

Also, the annuity rate might be based on a post-retirement interest rate of 2% per annum. The annuity rate is the amount of income you can expect to receive from your pension fund if you choose to purchase a pension annuity. Because this is influenced by factors such as life expectancy and interest rates, they are not fixed and can vary over time. Given the complexity of these variables, it’s generally sensible to interpret the results of the pension or annuity calculator with some degree of caution.

To work out your retirement age, you might base it on your eligibility for the contributory state pension, which is either 66, 67, or 68, depending on your date of birth. 

However, it’s important to note that retirement age doesn’t always correspond to when you start receiving the state pension. Many people choose to work beyond the age of 65, and if you’re self-employed, there’s no fixed retirement age. For some employees, your retirement age might be specified in your employment contract. 

Early retirement is also an option to consider, but it can help to work out how this would impact your pension benefits and make a plan based on that.

To make sure you’re saving for a comfortable retirement, the usual advice is to save at least 15% of your pre-tax income per year, including any contributions from your employer if you work in a company. However, starting with any amount of money, even as low as 10%, is generally better than saving nothing at all. 

Experts from Fidelity suggest that if you start saving for retirement at 25, you might aim to have saved one to one-and-a-half times your income by age 35. By age 67, the goal is to have saved around ten times your annual income. But, of course, this depends on the type of work you do, and this guideline won’t necessarily be suitable for someone who’s self-employed.

Experts generally recommend aiming for about two-thirds of your current income as your retirement pension. With many pensioners finding that even the maximum state pension is insufficient to keep up their desired lifestyle, supplementing it with a private pension can help you save more quickly.

To track your progress, here are some retirement saving goals:

• By age 30: Aim to have saved an amount equivalent to your annual income.

• By age 40: Aim for three times your income.

• By age 50: Aim for six times your income.

• By age 60: Aim for eight times your income.

Remember, these are suggested targets based on ideal circumstances, and they don’t suit everyone. You might choose to just save consistently and adjust your goals as you go.

Once you’ve used an Irish pension calculator to work out your pension pot and whether you’re roughly on track to meet your desired retirement income, the next step is to decide what to do with your pension once you retire. 

After calculating your pension pot, you’ll need to consider whether your work was mainly in the private or public sector. In the private sector, you typically have the choice between receiving a pension or opting for a tax-free lump sum along with a reduced pension. In contrast, public sector schemes usually offer a fixed pension amount alongside an additional tax-free lump sum. 

There are several different pension options, including: 

• Receiving a pension: You can choose to receive a regular income from your pension pot, which may involve purchasing an annuity. An annuity provides you with a steady stream of income for the rest of your life, offering financial security and peace of mind.

• Taking a lump sum: Many people choose to take a lump sum payment from their pension savings once retired, leaving some in the pension fund. This lump sum of money is typically tax-free up to a certain limit, with any amount over that limit subject to taxation. It provides you with immediate access to a portion of your pension funds, which can be used for various purposes, such as paying off debts or funding large purchases.

• Transferring to an Approved Retirement Fund (ARF): Another option is to transfer some or all of your retirement savings into an ARF. An ARF can offer you more control over your pension funds, allowing you to invest in a range of assets such as stocks, bonds, and property. This can potentially lead to higher returns but also comes with investment risks.

• Opening a high-yield savings account: You might also consider funnelling some of your retirement savings into a high-yield savings account to boost your retirement income. These accounts tend to offer competitive interest rates, allowing your savings to grow over time with minimal risk.

Each option comes with its own set of considerations, so it’s important to carefully think about your own financial situation and goals for later life. Pension fund calculators can be useful to evaluate the potential outcomes of each choice, helping you achieve your retirement dreams.

If your pension calculations show that you’re unlikely to achieve your planned retirement income, you might consider opening a high-interest savings account. Whether you prefer easy access to your cash or a top interest rate, Raisin Bank offers savings accounts from a range of banks to suit your needs. Simply register for a free Raisin Account and choose the account for you.