Can I Retire at 60 in Dublin with €300,000?

Can I Retire at 60 in Dublin with €300,000?


We have noticed a trending question spread across the web for people asking if it is possible to retire at age 60 in Dublin with €300,000, so we thought we would dive into whether this is feasible, taking into account the necessary financial considerations to achieve this. Retiring at 60 in Dublin with €300,000 presents several challenges due to the high cost of living in the city. We will examine the feasibility of this scenario, including other retirement examples at different ages and savings amounts. Additionally, it outlines strategies to achieve savings targets of €300,000, €500,000, and €1 million.



Cost of Living in Dublin


Dublin is known for its high cost of living, especially in terms of housing, utilities, transportation, and healthcare. According to Numbeo, the estimated monthly cost for a single person in Dublin is around €2,000, excluding rent. This translates to an annual cost of approximately €24,000, which is a conservative estimate and can vary based on lifestyle choices.



Financial Calculations


With €300,000 in retirement savings, applying the 4% rule suggests an annual withdrawal of €12,000. To determine if this is sufficient, we must consider additional income sources, such as the Irish State Pension.


The Irish State Pension (Contributory) provides around €13,780 annually, assuming eligibility for the full pension. Combining this with the withdrawal from retirement savings results in an annual income of €25,780.



Feasibility of Retiring at 60 with €300,000


Given the estimated annual cost of living at €24,000, the combined income of €25,780 could potentially cover basic expenses. However, this leaves little room for unexpected costs, inflation, healthcare needs, or lifestyle upgrades. Therefore, while technically feasible, retiring with €300,000 in Dublin would likely require a very frugal lifestyle and careful financial management.



Comparing Other Retirement Scenarios


Retiring at 50 with €100,000

Retiring at 50 with €100,000 is highly unlikely to be feasible in Dublin. The 4% rule would provide only €4,000 annually. Without access to the state pension until age 66, significant additional income sources would be necessary to cover the cost of living for 16 years.


Retiring at 55 with €200,000

Retiring at 55 with €200,000 provides slightly better prospects but remains challenging. The 4% rule yields €8,000 annually. This, combined with the state pension starting at 66, would provide approximately €21,780 per year thereafter. However, for the first 11 years, the retiree would need to supplement their income significantly to cover basic expenses.


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Retirement Strategies to Achieve Savings Targets



Achieving €300,000

Achieving €300,000 - Can I Retire at 60 in Dublin with €300,000


  1. Start Early: Begin saving as early as possible to benefit from compound interest.
  2. Regular Contributions: Contribute consistently to retirement accounts. Aim for 15-20% of your income.
  3. Investment Growth: Invest in a diversified portfolio with a mix of stocks, bonds, and other assets to achieve an average annual return of around 6-7%.

Example: If you start at age 30 and save €400 per month with a 6% annual return, you would accumulate approximately €300,000 by age 60.



Achieving €500,000


Achieving €500,000 - Can I Retire at 60 in Dublin with €300,000

  1. Increase Savings Rate: Aim to save 20-25% of your income.
  2. Higher Returns: Consider a more aggressive investment strategy while managing risk appropriately.
  3. Employer Contributions: Maximize employer-matched contributions in retirement plans.

Example: Starting at age 30, saving €600 per month with a 6% annual return, you could accumulate around €500,000 by age 60.



Achieving €1 Million


Achieving €1 million

  1. Maximize Contributions: Save the maximum allowable amount in tax-advantaged accounts.
  2. Side Income: Generate additional income through side jobs, freelancing, or passive income streams and invest these earnings.
  3. Real Estate: Consider investing in rental properties for additional income and asset growth.

Example: Starting at age 30, saving €1,200 per month with a 7% annual return, you would reach approximately €1 million by age 60.





Retiring at 60 in Dublin with €300,000 is possible but requires a frugal lifestyle and careful financial planning. Earlier retirement with smaller savings is significantly more challenging, especially in a high-cost city like Dublin. To achieve larger savings goals of €300,000, €500,000, or €1 million, starting early, saving consistently, investing wisely, and maximizing additional income sources are crucial strategies.


Consulting with a financial advisor can provide personalized guidance to help navigate the complexities of retirement planning and achieve financial security.



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The Power of Early Pension Contributions

The Power of Early Pension Contributions: Case Study


Meet Sarah: Sarah, a 45-year-old marketing professional. When she started working at her first job at age 25, her employer did not offer a pension scheme. She thought it prudent to start funding her own private pension, as she knew the importance of building up a retirement fund for the future. At age 25, she made the maximum allowable contribution of 15% (based on her age and earnings) to obtain the full pension tax relief available to her.


While her friends focused on enjoying their disposable income, Sarah understood the long-term benefits of early pension planning and the associated tax benefits.


Let’s look at a retirement case study 👇




  1. Both Sarah and her friends are all marketing professionals and started earning €30,000 per year at age 25,
  2. By age 45, their salaries had doubled to €60,000.
  3. Sarah started contributing at the age of 25, while her friends only started contributing at the age of 45.
  4. To simplify the case study, we have assumed an average annualised investment return of 6%; however, in real life, this will likely fluctuate every year.
  5. Inflation significantly impacts future value forecasts when calculating your pension and future retirement income. To account for this, we’ve factored in an average inflation rate of 5%.


Assumptions not included: 


  1. We have not included the full state pension that you may be entitled to, which is €277.30 per week.
  2. Its important to note that contribution amounts will vary each year due to factors like annual salary increases, pausing contributions or taking premium holidays. For the sake of this case study, we will keep the contributions consistent throughout the term.


Early Pension Contribution Case Study

Sarah’s Pension Calculation:


Sarah's Pension Calculation - The Power of Early Pension Contributions





Using the above figures, Sarah started contributing €375 per month (15% of her salary) into her pension at age 25, of which the actual net cost to her each month is only €300 (20% tax relief at her marginal rate of tax).



Pension Contribution Calculation: (Age 25 vs 45)


Pension Contribution Calculation (Age 25 vs 45) - The Power of Early Pension Contributions



Sarah’s total contributions over the 40 year term from age 25 to 65 would have amounted to €180,000. At retirement, Sarah would have walked away with a staggering €746,809. The power of compound interest, along with tax-free growth in her pension, would have significantly increased her retirement nest egg.


If Sarah started her pension at age 45 along with her friends, her retirement pot would have only amounted to €173,265. We can observe the significant impact that the first 20 years have had on the growth of her pension.


However, when calculating her retirement pot at age 45, we have not factored in the assumption that Sarah’s salary would have most likely increased between age 25 and 45. If we assume that Sarah and her friends salaries as marketing professionals doubled to €60,000 by the time they reached age 45, then we can use the below calculation to determine a more accurate outcome.


We will now calculate the retirement pot that Sarah’s friends would have accumulated if they started contributing at age 45. 👇



Sarah’s Friends Calculation:


Sarah's friends calculation





Similar to the first example, we will assume a rate of return of 6%, and that Sarah’s friends also paid the maximum allowable contribution into their pension, which at age 45 would be 25% of their net relavant earnings, equal to €1,250 per month.



Sarah’s friends start contributing at age 45:


Pension Contribution Calculation


Looking at the results above, you will notice that we haven’t adjusted Sarah’s contributions in line with any increase in her salary but have kept her contribution level at €375 per month over the 40 year term. Despite maxing out their pension contributions at €1,250 per month, Sarah’s friends’ pensions still fell short of Sarah’s by a significant €169,258 at retirement.


This exemplifies the critical impact of time horizon, compounded returns, and consistent, regular contributions on the long-term growth of paying into a pension.


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The Impact & Key Takeaways:


Early Contributions:

The power of compound interest is significant. Starting a pension early, even with small contributions, makes a huge difference in the long run.

Tax Advantages:

Pension contributions offer valuable tax benefits, effectively reducing your taxable income and giving your retirement savings a boost.

Pension Growth:

Sarah managed to accumulate a pension pot of €746,809 at retirement by contributing €375 per month over the 40-year term. Keep in mind, we have not factored in any increase in her contributions over the period simply to demonstrate the powerful effect of early contributions. If she had increased her contributions in line with her earnings, her pot would be significantly larger.


Sarah’s strong pension allows her to consider early retirement or pursue career breaks without financial worries.

Financial Security:

Over a 40-year period, Sarah’s pension pot has grown substantially, providing her with a sense of financial security for her future.

Peace of Mind:

Sarah enjoys a greater sense of control over her financial future, knowing she has a solid foundation for her retirement.



Relevant Resources:


How to boost your pension - The Power of Early Pension Contributions




Benefits of Employer Contributions - The Power of Early Pension Contributions




Reduce your Income Tax bill - The Power of Early Pension Contributions





Where to from here?


Planning for retirement can feel overwhelming. Everyone’s situation is unique, and there’s no one-size-fits-all answer.

We offer complimentary consultations to help you navigate your options. Contact our team if you’d like to learn more.



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Maximize Your Pension Contributions in Ireland


To maximize your pension contributions in Ireland, there are several strategies you can consider of which if used holistically can help build effective long term wealth. Increasing your pension contributions is not only an effective way to boost your retirement income but is also very efficient in minimizing your tax obligations by utilizing the tax breaks available through pensions.


Here are some steps you can take:


Pension Tax Relief


One of the main benefits of contributing to a pension in Ireland is the tax relief you can receive. Contributions to a pension scheme are eligible for tax relief at your marginal rate of tax, subject to the annual limits mentioned below. This means that if you are a higher rate taxpayer and are paying 40% in income tax you can claim back the same amount of tax by way of a pension contribution.


I.e.,  If you contribute €1,000 to your pension it will only cost you a net amount of €600.


The three essential tax incentives that pensions offer are as follows:


1. Tax relief on contributions – You can claim tax relief on contributions at your higher rate of income tax, 20% tax relief for lower earners and 40% tax relief for higher earners on all pension contributions.

2. Tax free growth – You do not pay tax on investment growth within your pension fund (No CGT, DIRT, or income tax).

3. Tax free lump sum – At retirement, you can take a tax free lump sum up to 25% of your fund when you reach age 60 (and in certain arrangements, age 50) up to a maximum of €200,000. The balance of your fund would then need to be taken as either an Annuity or Approved Retirement Fund (ARF).



Pension Contribution Limits


There are annual limits on the amount you can contribute to your pension while receiving tax relief. Contributions are limited by your age and income level, and full tax relief within these limits may be obtained. The maximum amount of earnings allowable for calculating tax relief is €115,000 per year.


Maximum Allowable Contributions



Standard example:

Fiona is 45 and earns €60,000 per year. The maximum she can contribute to her pension is 25% of €60,000, which is €15,000.

In this example, Fiona is in the higher tax bracket, and has a marginal rate of tax at 40%.


This means she can claim 40% tax relief (€6,000) back from the state on all her contributions, and will only being paying a net amount of €9,000, while realizing the total €15,000 contribution into her pension.


Max earnings example:

John is 51 and earns €200,000 per year. The maximum he can contribute is limited to €34,500, that is, 30% of €115,000 (max earnings allowable).

This means she can claim back 40% tax (€13,800) from the state on his total contribution of €34,500.


It’s important to keep updated on any changes to these limits, as they may vary over time.



Employer Pension Schemes


Whether you are an employee or an employer (business owner), it is definitely worthwhile considering contributing to an employer pension scheme. Employer contributions are subject to different contribution limits which are usually much higher than individual limits. This can significantly boost your pension savings especially if you are a key or executive employee in the company.



Employer contributions to occupational pension schemes


Employer contributions to an occupation pension are subject to different contribution limits regarding your earnings, years of service, and current or retained benefits. The maximum pension you can receive from an occupation pension is 2/3 of your final salary where the limit may be higher or lower depending on your years of service.


An example of the max pension contribution through an employer is illustrated using the ‘Ordinary Annual Contribution calculation’ referred to in the below case study.




Employer pension contributions to a PRSA


PRSA’s are becoming a popular option for retirement planning for both employers and employees. As of January 2023, employer contributions to a PRSA do not count as a Benefit in Kind charge. This means that contributions will not attract an income tax charge if your contributions are more than the personal tax relief percentage.



Darragh is 40 and earns €60,000 per year. He contributes 10% of his salary, or €6,000 annually, to his PRSA. His employer contributes 15% of the value of his salary, or €9,000 per year, to his PRSA.

At age 40, Darragh’s tax relief limit is 25%. He can still make an AVC of 15% of his salary to his PRSA.


What is now significant is that “the employer” will now be able to make unlimited BIK free contributions to the PRSA if you are a Company Director and want to extract wealth (profits) from the business without being taxed on them. Contributions will, therefore, not be limited by salary and service rules and full tax relief can be taken on the contribution in the year it is paid!


Find out more




Personal Pension


If your employer does not offer you a pension scheme or if you want to contribute additional funds, you can set up a private pension. There are two main types of personal pension plans available in Ireland, such as Personal Retirement Savings Accounts (PRSA) or Self-Employed Retirement Annuity Contracts (RACs).


Technically, employers are required by law to provide staff access to at least one Standard PRSA. It is designed to allow for flexibility when it comes to saving for your retirement and is set up as a contract between you and a pension provider. Tax Relief is available on the contributions you make towards your PRSA or RAC similar to the pension contribution limits mentioned above.


Speak with a financial advisor to determine the best option for your circumstances.



Additional Voluntary Contributions (AVC)


Consider additional voluntary contributions (AVCs): If you have a workplace pension scheme, you may have the option to make additional voluntary contributions on top of your regular contributions. AVC’s allow you to make further contributions to your pension, which can further enhance your retirement savings (refer back to the Employer PRSA example above).



Backdating Pension Contributions


Take advantage of backdating contributions. This is particularly relevant if you have unused pension contribution allowances or an income tax bill outstanding for the previous tax year, in which you want to reduce that tax owed to Revenue.


Before filing your next income tax return, take advantage of backdating tax relief to the previous year by making a lump sum pension contribution (using the pension tax relief calculation above). The contribution usually needs to be made by 31 October each year.


This is available for the self-employed, business owners, and PAYE workers. For PAYE workers or schedule E employees, this can be done by way of an Additional Voluntary Contributions (AVC) or a PRSA. 


Pension Review


It is important to review your pension regularly to ensure it aligns with your financial goals and retirement plan. This can involve monitoring your contributions, investment structure and performance, fees and charges, and any changes in legislation to ensure that your pension is not negatively impacted.


It’s always advisable to consult with a financial advisor who can provide up-to-date and personalized advice based on your specific situation and individual circumstances.



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