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Table of Contents
Steps to using our pension calculator
- Enter your current age
- Enter the age you would like to retire
- Enter your level of pension contributions each month
- Enter your expected rate of return
- Click ‘calculate’
Pension Calculator Ireland
Calculating how much you need to be financially secure in retirement should be a priority.
For most of us, our pension will play a major role in ensuring we can enjoy the lifestyle we would like.
We researched how much people would need to retire in Ireland. The results showed respondents would like upwards of €400,000 in their pension pot at retirement.
However, many of us underestimate how much we may need to contribute in order to reach such a substantial amount.
Our pension calculator allows you to understand and calculate how much you need to contribute in order to retire comfortably.
Retirement planning has become more important as we live longer, healthier lives.
We must consider how we will finance those extra years.
If you retire at age 60, you will likely have 20+ years of retirement to enjoy.
Use our pension calculator to avoid any potential shortfalls enabling you to plan the retirement you deserve.
Why should I use a pension calculator?
Using our pension calculator allows you to plan for retirement appropriately.
Without prior planning, you will rely on guesswork. There may also be an element of luck involved.
Using our pension calculator will allow you to plan and eliminate guesswork where possible.
In a couple of steps, you’ll know:
- Your projected pension in retirement
- Any potential shortfalls that may arise
- The total target you will need in your pension pot
How does the pension calculator work?
Our pension calculator works by forecasting the future value of your pension. This is calculated using the information you provide.
It uses a combination of your current age, retirement age, monthly conditions, and rate of return to accurately calculate how much you may have in retirement.
You have the flexibility to change the rate of return to whichever you feel is most realistic.
Your current fund choices will fall into a certain risk category. These categories will be able to predicate a rate of return over a period of time.
Our pension calculator uses minimal assumptions which will give you the best chance of an accurate prediction.
Calculating how much you will need in your pension
Calculating how much you may need to contribute to your pension can be difficult.
There are often assumptions and factors that are difficult to predict. For example, it is almost impossible to predict how funds will perform over a long period of time.
You can use historical data but it is not an exact science. Therefore, we need to rely on assumptions. Otherwise, the calculations would be impossible to predict.
The main assumptions include:
- Investment returns – an annual percentage for fund performance growth must be chosen at the outset. For example, 4% growth per annum. In real life, this percentage will likely fluctuate year on year.
- Contribution amounts – many pension calculators will account for a yearly increase in contributions all the way to retirement age. This is often between 1-3%.
- Inflation – when forecasting future values, inflation plays a significant role. Calculating your pension and future retirement amounts is no different. We have accounted for an average inflation rate of 5%.
Assumptions not included that are worth considering
- State Pension – the level of State Pension you are entitled to will depend on your level of contributions. The full State Pension is €13,172 per year.
- Current pension(s) – We have not accounted for any existing pension(s) as some arrangements can be accessed from various ages.
If you would like to know your total pension pot amount, simply add the figure from our calculator to your existing pension(s).
Some retirement calculators will include additional assumptions such as fees and charges associated with your fund.
It is important to be aware of these assumptions. Even a slight change to a percentage could dramatically impact your end goal.
Understanding what assumptions are used during the calculation process will give you flexibility and a better chance of achieving your retirement goals.
Below we look at different pension calculation examples.
Pension Calculation Examples
For simplicity, we will keep our assumptions the same but change factors such as the applicant’s age and monthly contributions.
Pension calculation - example 1
|Expected Retirement Age||65|
|Monthly Pension Contributions||€500|
|Expected Rate of Return||4.0%|
|Total at Retirement Age||€290,909|
What may seem like small changes can have a significant impact when calculating your retirement pot.
For example, if the above individual waited until age 45 rather than age 40 to begin the same level contributions, their fund total would be €211,106.
|Starting €500 monthly contributions at age 40||€290,909|
|Starting €500 monthly contributions at age 45||€211,106|
|Difference in pension pot||€79,803|
|Years it will last in retirement||20|
|Providing an annual income of||€26,460|
Pension calculation - example 2
In this example, we will change some of the inputs. We will increase the level of monthly contributions to €750.
This shows us how a relatively small increase can significantly impact over time.
The current age, retirement age, and expected rate of return all remain the same as in example 1.
|Expected Retirement Age||65|
|Monthly Pension Contributions||€750|
|Expected Rate of Return||4.0%|
|Total at Retirement Age||€316,659|
Alternatively, if our investment performance (rate of return) increased to 6% we’d have a total pot of €409,669.
If our rate of return dropped to 2% we’d have a total pot of €248,462.
These differences highlight the importance of external factors. Many of which are difficult to predict.
|€750||2% rate of return||4% rate of return||6% rate of return|
|Total Pension at Retirement||€248,462||€316,659||€409,669|
When calculating a future pension pot or any retirement calculations it is important to understand these variables often change over time.
Our table above shows the significant impact what may feel like subtle differences can have over time.
We also provide insight into a separate calculation. This allows you to choose your ideal retirement age along with how much you would like to have in your pension pot.
From here you can calculate how much you will need to contribute each month depending on your age when you begin your pension contributions.
|Intended retirement age||65|
|Intended pension pot goal||€500,000|
|Annual rate of return||4.5%|
Below we look at the amount you would need to contribute each month to reach your intended target.
|Starting at age 20||€286.37|
|Starting at age 30||€491.28|
|Starting at age 40||€904.16|
|Starting at age 50||€1,949.97|
|Starting at age 55||€3,306.92|
Should the State Pension be taken into account in my calculations?
Yes. However, you must consider the level of State Pension you will be entitled to.
The State Pension is broken into two categories:
To be eligible for the full State Pension (Contributory) you must be age 66 and have enough PRSI contributions.
The maximum you can receive from the State Pension is €253.30 per week as of 2022.
Although this is a modest €36 per day, it still should be kept in mind when calculating your pension or retirement needs.
It is unlikely this will be enough to live off. Particularly when we account for future inflation and the rising cost of living. €35 today will be worth a lot less in 20 years’ time.
At what age can I access my pension?
The age at which you can access your benefits will vary depending on the type of pension arrangement.
Certain arrangements such as Personal Retirement Savings Accounts (PRSAs) are accessible from age 50.
Personal Retirement Bonds (PRBs) can also be accessed from age 50 if you have left the employment where your benefits accrued.
Knowing what age your benefits can be accessed from will be crucial during the retirement planning process.
Calculating any future value of your pension pot will depend on what age it can be accessed.
Below we break down from what age various pension arrangements can be accessed.
|Pension Arrangement||Age you can access benefits from|
|Personal Retirement Savings Account (PRSA)||50 (scheme rules apply)|
|Defined Contribution (DC)||50|
|Defined Benefit (DB)||50|
|Executive Pension Plan||60|
The age at which benefits can be accessed should be kept front of mind in the retirement planning process.
If you plan to access your benefits from the earliest age possible, this will affect your overall calculations.
It will also likely mean you will cease contributing to the pension plan and therefore will affect your end calculations.
Tax relief on pension contributions
A major incentive to contribute to a pension is the tax relief on offer. Any contributions will be eligible for tax relief at your marginal tax rate within certain limits.
For example, if you pay 40% income tax, you will receive 40% tax relief on your pension contributions
|Monthly Contribution||Tax relief (40%)||Real cost|
Tax relief calculation examples
The tax relief you receive on contributions is a major incentive and allows you to save for retirement much easier.
As you contribute to a pension, the net or ‘real’ cost is lower than if you were to save in a regular deposit account.
For every €100 you contribute, your take-home pay will only be reduced by €60 should you fall under the 40% income bracket.
It will reduce to 20% tax relief should you pay income tax at 20%. Therefore, a €100 contribution would in fact cost €80.
|Contribution||Tax bracket||Real cost|
Calculating the ‘real’ future cost of your pension contributions
Receiving tax relief on your pension contributions is a major benefit.
It will dramatically reduce the amount you actually pay over time while building up a significant pot by retirement age.
However, it can be difficult to calculate exactly how much you will pay. Particularly as you contribute over a long period of time.
Most of us contribute to our pension for more than 20 years. Add inflation and fund performance into the equation and this can be difficult to calculate.
To help with this, we have broken down how much a particular pension fund at retirement actually costs in ‘real’ terms.
For this calculation, we need to know our inputs. There are as follows
- Years contributing to the pension = 27
- Monthly contribution = €500
- Expected rate of return = 5%
- Rate of rax relief = 40%
Total contributions made = €162,000
Total fund at retirement = €341,595
‘Real’ cost of contributions = €97,200
The above shows how a combination of tax relief and a healthy rate of return each year makes a pension an attractive option.
The difference between what was contributed in ‘real’ terms after tax relief and the final number was a surplus of €179,595.
It is worth noting that aspects such as the rate of return and inflation will fluctuate.
However, an average of 5% growth year-on-year is not highly uncommon over a long period of time.
Maximum pension contribution thresholds
Eligibility for tax relief is broken into thresholds. These thresholds relate directly to your age and increase as you get older.
|Age||Maximum percentage of taxable earnings allowable for tax relief on pension contributions|
|60 or over||40%|
It is important to keep these thresholds in mind when calculating your pension contributions.
You will need to ensure the amount you wish to contribute is allowable and eligible for tax relief.
There is also a maximum limit of contributions allowed while receiving tax relief. The current limit is €115,000 per year.
Are pension withdrawals taxed?
Pension withdrawals are taxed after you reach the tax-free threshold.
Most pension arrangements allow you to withdraw 25% of the total fund tax-free.
For example, if you had €500,000 in a PRSA and decided to retire early, €125,000 could be tax-free once you reach age 50.
These tax-free amounts are up to certain limits which we look at in more detail below.
Maximum pension contribution thresholds
As of January 2011, the maximum tax-free lump sum allowable from a pension is €200,000.
Any part of your pension that exceeds this lump sum is liable to tax in two stages.
Once you pass the €200,000 threshold, the rate of tax is 20% until you reach €500,000. Anything over €500,000 will be taxed at your marginal tax rate.
Your marginal tax rate is whichever rate you pay income tax at.
|Lump Sum||Tax Rate|
|Up to €200,000||0%|
|€200,001 – €500,000||20%|
|Over €500,000||Taxpayers Marginal Rate (20% or 40%)|
How much will I need to retire?
When calculating how much you need to retire in Ireland , it is important to consider all variables. Some of the key aspects are:
- What lifestyle you would like to have in retirement?
- What age you would like to retire?
- Whether you will have any passive income in retirement
- Eligibility for the State Pension
Your answer to each of the questions will impact how much you will need to retire.
Our pension calculator will help you assess potential shortfalls but it is always advised to enlist the assistance of a qualified advisor.
We have written in-depth guides on early retirement in Ireland and how much I need to retire in Ireland.
Both will provide you with case study examples, processes to follow, and general advice to ensure you take the best course of action.
Retirement planning process
Speaking with an advisor will allow you to follow a process and appropriately plan for retirement.
Although you may not have enlisted the help of one yet and are looking for a general roadmap.
See our retirement planning process below:
- Set your retirement goals
- Assess your current financial situation
- Identify any potential retirement income sources
- Managing any future income
- Reviewing your situation regularly
It is worth noting there is no substitute for speaking to an experienced advisor. They will help you assess your situation and take a long-term view.
If you would like to speak to a member of our team, you are welcome to contact us.
Should I take the State Pension into account?
Yes. The State Pension will likely play an important role in the value of your retirement savings.
Although, eligibility should be front of mind. You should calculate the Contributory vs Non-Contributory options.
You will be eligible for one the above depending on your PRSI contributions.
The age you receive the State Pension will also change from 66 to 68. However, this change will not be fully implemented until 2039.
Conclusion - How using our pension calculator will help you plan for retirement
Hopefully we have answered some of the questions you had and provided clarity. Using our pension calculator will allow you to estimate how much you may have by retirement age.
Although there are variables we touched on throughout this guide. Aspects such as inflation and your rate of return will fluctuate.
Over a long period of time, it should be fine but it is worth keeping an eye on.
As much as our calculator will help identify potential gaps or shortfalls, it does not replace seeking professional advice.
Pensions and retirement planning are rarely straightforward. We all have different needs and circumstances.
It is for this reason that we offer a complimentary consultation . Although there are only a small number of spaces available due to demand.
If a consultation is something you feel may be beneficial, you are welcome to contact our team.
If you are happy using the calculator and the numbers look good, feel free to sign up for our email list.
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