How to plan your Retirement Income

Knowing and utilising your available options can go a long way in securing your finances when planning for your retirement.

What is a retirement plan?

Any plan created for accumulating income to live on after you retire might be considered a retirement plan. The aim is to ensure that you can maintain your lifestyle or at least a comfortable standard of living once you stop working. This includes:

• Income Replacement: Using a variety of sources, such as savings, investments and pensions, to replace your pre-retirement income.
• Financial Independence: Reaching a point of financial stability where you are not dependent on your employment for income.
• Estate Planning: Making sure your fortune may be donated to worthy causes or passed on to your descendants in the way you wish.

Saving money is only one aspect of retirement planning; another is developing a thorough plan that takes into account your health, lifestyle, inflation and any potential changes in your situation.

What are the different retirement plans?

State Pension

The State Pension is a state-provided retirement income. In Ireland, the State Pension is payable to those who have made the appropriate PRSI contribution. In 2025, the maximum State Pension rate per week is €289.30. If you have high living expenses or you like to travel, for example, relying solely on the state pension may not be enough to enjoy a comfortable retirement.

The state pension offers a base. It’s wise to add additional revenue streams to it.

Workplace or Occupational Pensions

Employer-sponsored retirement plans are also called occupational pensions or company pensions. Generally, there are two types:

Defined Benefit: Defined Benefit commonly depends on your salary and length of service, but guarantees a certain benefit amount in your old age.

Defined Contribution: You and your employer both contribute to this retirement plan, but the benefit amount varies as it totally depends upon the performance of your investments.

Both DB and DC pension plans are provided by many workplaces. For specifics, ask your employer.

PRSAs, or personal retirement savings accounts

PRSAs are individual and employee retirement savings in various forms tailored to suit your needs. They allow you to invest your retirement savings into a range of assets while making tax-efficient contributions. These are portable and adaptable, and they can be established by employers or by individuals.

Accounts for Savings

This isn’t a standard retirement plan, but savings accounts may add to your retirement income. High-yield savings accounts & fixed deposits can help build a financial cushion to keep you comfortable during your retirement.

Investments and Shares

Equities, bonds, mutual funds and ETFs can help with capital gain, separate from dividend income. While these are much riskier investments, if well-managed, they will contribute a great deal to your retirement savings.

Investing in Real Estate

Real estate may generate retirement income either in the form of rental income or sale of assets. However, real estate investments require substantial capital with continuing management.

Annuities

An annuity is a contract with an insurance company that guarantees income for a set period or for life. While they provide predictable income, they can be complex and might not be suitable for everyone due to their inflexibility.

In Ireland, annuities are less popular than other alternatives due to their structure and the availability of other retirement income options. However, they can still be a possibility for those seeking a steady income stream without the need for investment management.

Retirement Relief

For those selling a business or farm, retirement relief can reduce or eliminate capital gains tax. This relief is designed to encourage business owners and farmers to pass on their assets to the next generation without incurring significant tax liabilities. The relief is subject to certain conditions, such as age limits and the length of ownership, so it’s essential to consult with a tax advisor to ensure you meet the criteria.

When to start planning for retirement

Start Early and Retire Comfortably

Here’s why it is best to start retirement planning as early as possible:

• Compound Interest: With time, compound interest allows your investments to grow, ramping up your retirement savings immensely.
• Risk Management: The earlier you begin, the more potential there could be to make higher profits because of the risk taken at an early age.
• Lifestyle Shifts: You can gradually make adjustments in your spending patterns and lifestyle to adapt easily to your new retired life

But it’s never too late to get started. You can still take important steps to safeguard your financial future even if you’re getting close to retirement age:

1. Maximise Contributions: If you’re behind on your savings, raise your contributions to retirement plans such as PRSAs.
2. Catch-Up Contributions: If you’re over a specific age, some plans let you make catch-up contributions, which lets you save more money faster.
3. Seek Expert Guidance: askpaul’s financial planning consultations will assist you in creating a plan that is specific to your existing financial circumstances.

Retirement planning is a journey that requires time, patience and strategic thinking. Whether you’re just starting your career or nearing retirement, askpaul’s pension consultations can guide you through the process, ensuring you’re well-prepared for your golden years.