How Much Do I Need to Retire in Ireland? Complete Guide

Are you wondering how much you need to retire comfortably in Ireland? It can be challenging to determine the exact amount with rising living costs and various factors to consider.

In this blog, we will explain the costs of retirement, including housing, healthcare, and everyday expenses. We’ll also discuss the state pension, personal savings, and other income sources you might need. So, let’s get into it and start planning your future!

The cost of living includes housing, healthcare, food, utilities, and transportation. Housing is one of the biggest expenses; whether you plan to rent or buy, it’s important to know current prices.

Healthcare is another key cost. While public healthcare is available, many retirees opt for private insurance to cover extra services.

Everyday expenses such as groceries, utilities, and transport also add up. Understanding these costs helps you plan your retirement budget more effectively.

In Ireland the state pension is available to people who have paid enough PRSI contributions during their working life.

To qualify, you must be at least 66 years old. It’s a good idea to check your contributions early to ensure you qualify. If you spent a number of years as a Homemaker.

You can check your contributions by going to https://services.mywelfare.ie/ and requesting or calling the pensions office in Sligo on 071 9157100. You will need your pps number.

Relying only on the state pension can be risky. The pension amount is quite low compared to the average cost of living, meaning you may need additional savings or income sources to live comfortably. It’s important to plan for other ways to fund your retirement to avoid financial stress.

Building up personal savings allows you to cover unexpected expenses and enjoy more financial freedom during retirement. Personal savings can come in many forms, but some of the most common ones are.

• Emergency Fund = 6 months of cash.
• Retirement Accounts and Pensions.
• Investment Savings.
• Other income sources.

Life can be unpredictable. You may face sudden medical bills, car repairs, or home maintenance costs. Having a cash cushion allows you to handle these without going into debt or having to sell other assets to cover short-term needs.

Knowing you have a financial safety net reduces stress and helps you make better decisions, not driven by panic or immediate financial pressure.

There are several types of retirement accounts and pensions you can use to save for retirement. We break pension planning into 2 stages depending on your life stage.

Pre-Retirement (while you are working)

• Personal Retirement Savings Accounts (PRSAs): Flexible and portable accounts that allow you to save and invest for retirement. Great for self-employed people to minimise income tax.
• Company/Occupational Pension Schemes: Employer-sponsored plans that often include contributions from both you and your employer.
• Executive Pension: If you are a business owner executive pensions legally allow you to extract cash from your business.

Post-Retirement (when you are fully retired)

• Approved Retirement Funds (ARFs): Investment funds that allow you to manage your pension savings and withdraw money as needed during retirement.
• Annuities: guarantees to pay a specified level of regular income for your lifetime.

Expected Returns on Different Pension Funds

The returns on pension funds can vary greatly depending on the amount of time you have to build your pension fund and the level of risk you are comfortable with.

• Low risk pension would expect to gain on average 2-3% per a year.
• Medium risk pension would expect to gain on average 5-7% per a year.
• Hight risk pension would expect to gain on average 10%-20% per a year.

If you have already maximized your pension contributions and taken full advantage of available tax reliefs, there are additional investment products you can explore to further grow your income and strengthen your financial security in retirement.

By diversifying beyond your pension plan, you can tap into a wider range of investment opportunities, which may help boost your income streams and offer more flexibility in managing your retirement savings.

Part-Time Work or Consultancy
Many retirees choose to work part-time or offer consultancy services in their field of expertise. This not only provides additional income but also keeps you engaged and active. Even working a few hours a week can add up to a substantial amount over time. For example, earning €200 a week through part-time work can amount to €10,400 annually.

Rental Income
If you own property, renting it out can be a reliable source of income. This is especially true in popular areas where rental demand is high. For instance, renting a property in Dublin can bring in around €1,500 to €2,000 per month, adding significant funds to your retirement income.

If you can’t afford to buy a rental property you could always consider taking advantage of the rent a room scheme. This allows you to earn up to €14,000 tax free from renting a room in your house.

General Rule of Thumb (4% Rule) One common rule is the 4% rule, which suggests you should save enough to withdraw 4% of your retirement savings each year for the remainder of your life.

Single Person Living Alone

Factors Affecting the Amount Needed:

Lifestyle Choices: Your desired lifestyle in retirement greatly affects how much you need. Frequent travel or expensive hobbies require more savings, while a simpler lifestyle requires less.

Health and Longevity: Healthier individuals who expect to live longer need to save more to cover additional years of expenses. Health care costs can also be significant, so it’s wise to plan for potential medical expenses.

Existing Debts and Financial Obligations: Consider any existing debts or financial obligations. Paying off debts before retirement can reduce the amount you need to save.

Housing Costs: Housing is a major expense. Knowing your housing costs helps determine your retirement needs. Downsizing or moving to a cheaper area can also affect your budget.

Retiring at Age 55: To retire at 55, you would need a substantial amount of savings. For example, you might need around €645,742 to cover 27 years of retirement, assuming your pension would need to replace an income of €35,250.

Retiring at Age 60: Retiring at 60 reduces the number of years you need to fund, so you might need around €478,492, assuming the same annual income replacement value.

Retiring at Age 66: This is more realistic for many people. You might need around €266,992 to cover 17 years of retirement, assuming the same annual income replacement value.

Rising Healthcare Costs
Healthcare expenses often increase with age. While Ireland provides public healthcare, many retirees opt for private health insurance to cover additional services.

The cost of private health insurance can vary but expect to pay around €1,000 to €2,500 annually per person. Ensuring you have enough savings to cover these costs is important.

Changes in Housing Costs
Housing costs can fluctuate based on market conditions. If you plan to downsize or move to a different area, consider the potential changes in housing expenses.

For instance, moving from Dublin to a smaller town might reduce your housing costs significantly, freeing up more funds for other expenses.

Lifestyle Changes
Your lifestyle in retirement will impact your costs. If you plan to travel frequently or take up new hobbies, factor these into your budget.

For example, travelling twice a year might cost an additional €5,000 annually. Adjusting your savings plan to accommodate these lifestyle choices is important.

For personalised advise and detailed financial planning, consider consulting with Greenway Financial Advisors. We can properly guide you through each step, ensuring your retirement plan is customised according to your needs.

Contact Greenway Financial Advisors today to start planning for a secure future.