Know how to retire early.
Learn effective strategies to retire early by maximizing savings, investing wisely, minimizing expenses, and building alternative income streams.
Getting a quote is the first step in your journey! Answer a few questions and wait for one of our Advisors to contact you!
What are the advantages of retiring earlier?
Early retirement offers numerous benefits to individuals seeking financial independence and a more fulfilling lifestyle. Firstly, it provides the opportunity to enjoy more leisure time and pursue personal interests, hobbies, and travel experiences while still in good health and vitality. Early retirees have the flexibility to spend quality time with loved ones, contribute to their communities, and engage in lifelong learning pursuits. Additionally, early retirement allows for greater control over one’s time and freedom from the constraints of traditional employment, leading to reduced stress levels and improved overall well-being. Financially, early retirement provides peace of mind and security, as individuals have more time to build their savings, investments, and passive income streams, ensuring a comfortable and sustainable lifestyle throughout their retirement years. Furthermore, early retirees can take advantage of their prime years to explore entrepreneurial ventures, volunteer opportunities, or pursue passion projects without the pressures of a full-time career. Overall, early retirement empowers individuals to design their ideal lifestyle, prioritize personal fulfillment, and embrace the joys of living life on their own terms.
What strategies can I use to retire early?
1. Take advantage of the tax Relief
Contribute to retirement accounts, such as Personal Retirement Savings Accounts (PRSAs) or employer-sponsored pension schemes, to benefit from tax relief and compound growth.
Boost your contributions with the Employer Benefit
If your employer offers a pension plan with matching contributions, take full advantage of it. Employer contributions can significantly boost your retirement savings. On the example, thanks to tax relief, your effective cost is only €130. This means you’re able to contribute more to your pension pot while paying less. You’re getting €304 more into your pension pot, it’s literally free money!
2. Maximize Savings
Increase your savings rate by cutting unnecessary expenses and living below your means. Aim to save a significant portion of your income.
3. Invest Wisely
Invest your savings in assets that offer long-term growth potential, such as stocks, bonds, and property. Consider diversifying your investment portfolio to manage risk.
4. Minimize Debts
Pay off high-interest debt as quickly as possible to reduce financial burdens and free up more funds for saving and investing.
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Transfer your benefits
If you transfer your pension to a Personal Retirement Bond (Also known as a Buy out bond), your old benefits will be moved to a pension plan controlled by you. This also allows you to select a risk profile that suits your current needs and your benefits can be taken from age 50.
How a PRB works
- Your transfer value sum is transferred from your current pension(s).
- The transfer value sum is invested in a fund chosen by you or in any of the default funds depending on your risk profile.
- No new contributions can be made.
- The value will rise or fall depending on performance of the selected fund and risk profile.
- At retirement you can take your benefits. This can be from age 50.
- Any investment growth is tax free.
Is a PRB different from a regular Pension?
A PRB is primarily for receiving benefits from a company pension which you are no longer a member of, or where your employment has ceased. You also can’t make any contributions to a PRB but you can invest the funds similar to a regular pension (Selecting fund options).
Funds, Risks and Investments
The specific funds you select for your retirement savings can greatly impact the potential for compound growth. Generally, investing in a diversified portfolio of assets can help spread risk and maximise growth potential. Let one of our experienced financial advisors help you with that! The level of risk you’re comfortable with will depend on your individual financial situation and risk tolerance. Younger individuals may opt for a more aggressive investment strategy, while those closer to retirement might choose a more conservative approach.
How much money do I need to retire?
As retirement nears, you likely have a grasp on your expenses and budget. However, it’s crucial to note that retirement costs can vary widely based on your lifestyle and choices. Consider your savings, expected expenses, healthcare, and potential income sources like the State Pension.
Your Questions Answered
We’re living longer than previous generations. Upon retirement, on average we will have 20-30 years of retirement. A pension plan will make sure you’re financially sound for these years. Whether you wish to travel, retire to the country, or spend time with your children & grandchildren.
The amount you will receive per month entirely depends on how much you’re willing to pay per month, the length of time you’ve been making contributions, the type of pension plan and its investment return. You can also choose to receive a lump sum upon retirement or not.
As of today, the State Contributory Pension is about €240 per week. For most people, during their 20-30 years of retirement, this simply isn’t enough. When you pay into a pension plan, you will receive both the state pension (If available to you) and your Pension Plan.
Tax relief reduces the actual cost of your pension. You do not have to pay tax on money that you put into a personal pension (This falls within the limits set out below). This is calculated at the highest rate of tax you pay (Currently 20% / 40%)
Example:
Monthly contribution = €100
Tax Relief (40%) = €40
Cost to you = €60
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