Financial planning for retirment in your 60s

If you're looking forward to finishing work in the next few years, this is your last opportunity to get your pension in the best shape possible for a comfortable income in your retirement. Plus, it's the last change for eligible taxpayers to get up to 40% income tax relief.

Saving for retirement in your 60s – understanding the benefit of tax relief

Say you have a salary of €100,000 and a higher rate taxpayer, your maximum annual contribution in your 60s can be:

Select the right income option for you

It’s quite likely that this is the time you’ll make your retirement choices. Your pension scheme or pension provider will probably have sent you some booklets to read. Don’t cast these aside as they contain lots of useful information. In most cases, when you choose the sort of income you’ll take from your pension, that choice will stay with you for the rest of your life. So choose carefully. Here are some of the income options that may be available to you:

Retirement lump sum: take a tax-free Retirement Lump Sum (subject to a lifetime limit of €200,000).

Buy a pension for life (annuity): When you hear people talking about a pension, this is what they usually mean. A pension for life is a regular income paid to you for the rest of your life.

Approved retirement fund (ARF): With an ARF, you control your retirement fund and can invest it in a wide range of investment funds. You can also make withdrawals when you need them. And because you own your fund, you can leave it to your dependants when you die.

Receive a taxable cash sum: After you take your tax-free cash, you can take all or part of the balance of your fund as cash and pay tax on it. Any money that you withdraw in this way will be taxed at your highest rate of income tax (currently 20% or 40%). PRSI of 4% and the Universal Social (USC) of up to 8% may also be applied depending on your income and age.

Decide when to retire

• If you took out a pension when you were self-employed or were working for a company which did not contribute to your pension, you have a Personal Pension. You can at any time between age 60 and 75.
• If you were working for a company and joined a pension to which your employer was contributing, you have a Company Pension. Your normal retirement age is generally set by your company and can be between 60 and 70. If you decided to top up your company pension with extra voluntary payments, you have an additional voluntary contribution (AVC) pension. As this is linked to your company pension you must take your retirement benefits at the same time.
• You may have a Personal Retirement Savings Account (PRSA). This is a pension plan available to employees, self-employed, homemakers, unemployed or any other category of person. You can draw on your PRSA at any time between age 60 and 75.
• If you left an employer and transferred your pension fund to a standalone pension, you have a Retirement Bond. Your normal retirement age is set in your company pension and does not change when you transfer to a Retirement Bond. It can be between 60 and 70.

You may be able to take your retirement benefits earlier.

1. Source: Brokers Ireland Survey July 2023 ‘The value of advice’. The average pension pot of those who sought pensions advice from a financial broker was €130,525 compared to €84,230 for those who didn’t seek advice. 

This article is not intended to give advice or a personal recommendation. If you'd like a personalised recommendation based on your circumstances, you should speak with a financial broker.  You can find a financial broker on brokersireland.ie.

Revenue rules and terms and conditions apply. Remember that tax laws can change over time, so it is important to check revenue.ie for the latest information.