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Early retirement pros and cons.

  • 13-05-2022 2:38pm
    Registered Users Posts: 96 ✭✭ ceoltoir

    I have three years to go to retirement (at age 65) from a public service job. However, I would like to retire early and move from Dublin to my home-place in rural Ireland. Perhaps do some of the things I’ve always wanted to do while it’s still possible.

    I’ve inherited the family home, so there’s a place to live and no rent. There’s a €6,000 car loan but that should be paid off in the next few years. No other debts.

    The problem is that my public service pension is not very big and would be reduced by about €50 per week on early retirement. 

    I don’t have any savings and would rely entirely on the PS pension plus the state pension at 66, about €14,000 a year in total, if I’m lucky. I have digital technology skills and would be willing to continue working part time, either for myself or for others. The prospect of having to survive on very little money is somewhat terrifying.

    My lump-sum payment would be just under €50,000. A large portion of that would have to go into an emergency fund.

    I’ve spoken to financial advisers in the past but they seem more geared towards people who have a large pot of cash to play with and who want to buy AVCs or similar products. There isn’t much they can say to me since I don’t have any ready cash.

    Would it be foolish of me to go early forgo €50 a week in payments, just to go early? In the end, that’s probably a question that only I myself can answer but it would be nice to hear other people’s views on early retirement and the challenges involved.

    Post edited by Jim2007 on



  • Registered Users Posts: 4,006 ✭✭✭ SuperBowserWorld

    Can you work mostly remotely for the next 3 years ?

  • Registered Users Posts: 96 ✭✭ ceoltoir

    Unfortunately not. I work remotely for three days in the week but must be available for meetings at short notice. Remote working wouldn't be practical in future as I'm moving to the other end of the country. There may be a possibility of doing outsourced work.

  • Posts: 8,856 ✭✭✭ Simon Nutritious Link

    So best of luck whatever you decide OP. A few questions for you.

    1. Any possible inheritances in coming years (not guaranteed I know but worth considering)
    2. Possibilty of selling your house for a smaller one and releasing capital for savings?
    3. Employability- what in demand skills do you have for say working part time?

    2400 euro is a hell of a lot of money when you’re going to be on a small pension- just look at rising prices right now - I’d consider staying on to get the full pension entitlement as it sounds like every euro will be important to you.

  • Registered Users Posts: 4,812 ✭✭✭ Addle

    It’s not just €50 less pension a week for the rest of your life, it’s possibly 3 years salary and savings your missing out on.

    I couldn’t go early if I was in your position.

  • Registered Users Posts: 23,813 ✭✭✭✭ Sleepy

    Also worth considering if the home place might need some modernising? Renovations are insanely expensive at the moment and, with energy costs only going one way, should insulation be lacking or the heating system out-dated, you could find running costs escalating beyond a fixed income.

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  • Registered Users Posts: 650 ✭✭✭ Quitelife

    Your health is a big thing , i intend to retire at 60 and hopefully have twenty years of retirement , i dont have a massive pension but i'll manage. Have you 14K plus state pension thats 26K per annum if you do. ill be similar at 60 and i'll manage with that .

    Id be happy to able to for day trips,walks , stuff midweek while im able at 60 rather than keep going to 65 and have less years to do things . Im working since 18 and after 42 years ive done my bit.

  • Posts: 8,856 ✭✭✭ Simon Nutritious Link

    Can I clarify something here- what exactly will be your PS pension? Is it 14k if you retired right now but a bit more if you wait until 65 and then you also get the state pension at 66/67 or whatever the age is ?

    Also, my understanding is that with public service pensions you could look at buying service years if short - so might be worth exploring that and working out your remaining time as well as investing in buying additional years service if you’re not at 40 years service pension right now or whatever it is that gives you a max pension

    Finally if you didn’t take the 50k tax free lump sum what would your pension be? While taking this lump sum can be beneficial it will require careful budgeting if it’s to last you your retirement - an old family home with leaking roof, bad electrics etc will see that gone and more besides - proceed with caution

    Post edited by [Deleted User] on

  • Registered Users Posts: 1,649 ✭✭✭ rolling boh

    Seems you would be fairly tight financially on those figures so I think you might find it a bit tough and possibly regret going early .I know everybody talks about health etc which is of course important but running short of money in later years would be problematic and most likely too late to increase your income .

  • Registered Users Posts: 96 ✭✭ ceoltoir

    Thank you.

    1. Possible (small) inheritance from my mother.
    2. A possibility but I'd like to hold on to the family home. Property prices aren't very good in that part of the country anyway.
    3. Graphic design, photography and video skills.

  • Registered Users Posts: 96 ✭✭ ceoltoir

    That's very true. The loss would be fairly substantial.

    There's a bit of a moral dilemma too, as my very elderly mother lives in the house. Her care falls almost entirely on other family members. I feel I should be there to give me assistance.

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  • Registered Users Posts: 96 ✭✭ ceoltoir

    Yes, that's one of the big worries. The house is in good condition but somewhat old-fashioned. The septic tank needs to be replaced and the electrical and plumbing systems could do with being updated. It would probably cost a fair bit.

  • Registered Users Posts: 96 ✭✭ ceoltoir

    Thank you all for the replies. I was away over the weekend and didn't get a chance to reply. All the advice/observations have been extremely useful and have given me lots to consider. In the end I suppose it's up to me to make the final decision. Thanks again.

  • Registered Users Posts: 74 ✭✭ covidcustomer

    Hi Ceoltoir, how many years service do you have if you don't mind me asking?

  • Talk to your pension Dept, if you are class A PRSI, they might pay the old age pension on top of the civil service pension. I forget the exact term used, it's not widely publicised, but it happens to balance the A and D class pensioners.

  • Registered Users Posts: 74 ✭✭ covidcustomer

    "Integrated Pension" is the term I believe and in that case a "supplementary" pension is paid until he is 66 when the PRSI entitlement kicks in (reaches State Pension age).

    Provided of course that he is paying Class A PRSI.

  • Registered Users Posts: 23,813 ✭✭✭✭ Sleepy

    Re-plumbing and re-wiring an older property? Sadly you're looking at close to 6 figures there for that and insulation upgrades alone. The Deep Retrofit grants may be worth looking into and I believe there are some upgrade schemes for OAPs which your mother may be entitled to (obviously better to get these done sooner rather than later as they'd improve her quality of life).

  • Registered Users Posts: 96 ✭✭ ceoltoir

    Yes, luckily I'm entitled to the State pension at 66. That should be a big help.

  • Registered Users Posts: 96 ✭✭ ceoltoir

    I imagine that sort of thing doesn't come cheap. Happily, the house is in very good condition at the moment and my mother is entirely comfortable there. There's attic insulation and the everything else works fine. It's more in the long-term that it would need to be upgraded.

  • Registered Users Posts: 23,813 ✭✭✭✭ Sleepy

    The deep retrofits don't come cheap but worth investigating the other options. Found the scheme I was thinking of:

    Your mother would qualify if she's already getting the Fuel Allowance which she'd be entitled to if she's in receipt of a state pension and it can cover additional attic insulation, wall insulation etc.

    Worth looking into :)

  • Registered Users Posts: 96 ✭✭ ceoltoir

    That's very useful Sleepy. Thanks for looking it up.

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  • what I am saying is that the civil service might give the eqivalent of the old age pension you now, and not wait until you are 65. They add it onto your pension, so that the A and D people get the same.

    I know for fact it's done in the dept I work for.

    Ask, and they shall receive...............

  • Registered Users Posts: 15,543 ✭✭✭✭ Spanish Eyes

    Have you calculated exactly how much three more years will mean to you pension wise?

    I know that if you retire now or soon you will lose your annual salary to be substituted by an actuarially reduced pension, but will that pension be much greater after three years and no reduction?

    If you are determined and willing to do it, you could consider selling the inherited home (if it needs major upgrades) and purchase a future proofed good spec small property in a similar location for your dotage!

    Have you worked out exactly how much you will need to live on? Do a budget based on your retirement income. Work out how much of your lump sum you would need for three years to subsidise it. Consider smaller car, foregoing things like holidays for a bit and so on. You don't have to become a monk and live on bread and water though!

    The big question is what financial advantage in €per month is it to stay on. I don't know, but I can't see three years adding a huge amount to your pension.

    You could always consider a three day week or some variation of work sharing up to retirement date also. Think about that one too.

  • Registered Users Posts: 96 ✭✭ ceoltoir

    Having looked again, the loss is not as large as I initially thought. If I retired next year (aged 63) my annual PS pension would be €8,348 per annum. Lump sum of €48,000. I'll have 26 years of service.

    If I retired at age 65, my PS pension would be €9,000 per annum, with a lump sum of €51,400.

    I would lose about €13 per week by going at 63.

    The house is in good condition. It's just that it's more in my parents style than mine, so a little updating would do.

    I've done a rough budget but it looks fairly tight. There's no getting away from the recurring bills. Still, life in the country would be considerable cheaper.

    Thank you very much for all your suggestions.

  • Registered Users Posts: 96 ✭✭ ceoltoir

    I've never heard of that one. Would that not be a huge extra cost for them? I work in a university, so it might be slightly different.

  • It happens frequently, might be at local discretion, I am not sure,

  • Moderators, Business & Finance Moderators Posts: 8,869 Mod ✭✭✭✭ Jim2007

    Here is the thing that would concern me - you don't seem to have any credible skills in managing your finances... You are a couple of years away from retirement and from what you say, you have no saving, no emergency fund, no assets acquired through savings and a debt of 6k.... and now you are expecting to live on a substantially lower income.

    I don't expect you to answer here, but I think you need to ask yourself - what happened, where did the money go? Your profile is a long way from those of people taking early retirement and I'd have serious concerns about you pulling it off, since you appear to have been unable to live below your means in the past.

  • Registered Users Posts: 96 ✭✭ ceoltoir

    Guilty as charged Jim2007, though I think your judgement is a bit harsh.

    True, my money management skills leave a lot to be desired. In my defence, I did come to the world of work in the 1980s, a time of great economic depression in Ireland. It was impossible to find steady employment during that time. That and not knowing what I wanted to do in life. Which I still don't know!

    I was lucky to get a permanent full time job in my late 30s. That came with a not very big salary and, combined with living in Dublin, left very little for savings. There was an SSIA account but some of that was spent on clearing a car loan. The rest was probably spent foolishly. Having said that, I've never lived an extravagant or high-spending lifestyle. I don't have much to show for it now.

    I'll be relying on my contributory pension plus the state pension. While that won't be huge, it will still be more than half of my present salary. Part of my final lump sum will go towards an emergency fund.

    I also intend to take on some part time private work after retirement

    So, yes, the reality of the situation is dawning on me but it seems there's little I can do about it now.

  • Moderators, Business & Finance Moderators Posts: 8,869 Mod ✭✭✭✭ Jim2007

    Yes my assessment is brutal, but when it comes to finances there is no room for sentiment, this is not a decision that can be reversed. The 80s were a long time ago and I was there too. It's been 40 years ago and you have been in permanent job since your mid thirties and not having any accumulated savings at this stage, means that you have been accustomed to spending it all. So cutting your spend by at least 50%is a big ask. In my experience people can usually get by on 65% - 70%.

    I know you said you have 'Graphic design, photography and video skills', but unless you have an established reputation, it will be hard going as you will be competing against college kids and people like those on say fiverr ( and so on.

    My suggestion would be to try living on say 60% of your income for the next 12 months and see if you can do it and see how it makes you feel. You'll also have some saving by then as well.

  • Registered Users Posts: 1,160 ✭✭✭ Murt10

    None of my businness but....

    I presume OP is paying rent while living in Dublin. This could be considerable but will disappear when he moves home so there's that to be taken into account. There are also a lot of expenses from going work, - travel, lunch, coffee breaks, work clothes, collections etc. These will also cease when he moves home.

    At the same time, he's now going to have a lot more time on his hands to spend, which he couldn't do while he was working, so if he's a shopaholic or indiciplined he's heading for trouble.

    If he wants to travel he will be in a much better position to take advantage of all the over 60's deals both here and abroad.

    One major consideration is that his VHI (or whoever) premiums will remain the same when he retires and so comprise a far larger portion of hid income.while all his other deductions will stop or reduce significantly.

    As for health, the only certainty in life is that every day we are another day nearer meeting our creator. None of us is ever going to be as healthy as we are today. Our health is on a downwards trajectory. The long term prognosis for every one of us, without exception, is death. 😀😀😀

    So for my money, I'd take the money now and run and get as much enjoyment out of lufe as he can.

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  • Registered Users Posts: 74 ✭✭ covidcustomer

    From the Dept. of Education. Might be helpful regarding payment of the supplementary pension.