Are you are a 1970s child and want to know when you can retire? In order to receive the State pension in Ireland, you’ll be waiting until at least 2036.

But by making some changes now and taking charge of your pension plan, you might not have to wait that long to stop working.

In fact, it’s possible to access pension savings from age 50 – that is, now, if you were born in the first half of the 1970s.

Hang on a minute…

Before you dive into that pension pot, some careful thinking is required.

Retiring early doesn’t happen by accident.  It requires a combination of early planning and strong savings levels over several years to make sure your financial position will remain strong for several decades.

Dipping in early means your pension funds have less time to grow, and need to stretch out over a longer retirement period.

So what can I do today?

Whatever your current pension position, there are several steps you can take to accelerate the date when you’ll be able to afford to retire early.

1. If you want to get out early, start early

If you want to finish early, start early.  The power of your money compounding means that a contribution of €100 per month when you’re 40 can have the same impact as around €450 per month twenty years later.

Most people in Ireland targeting early retirement will need to plough serious sums into their pension as soon as their earnings allow.  If you’re in your 40s or early 50s, that means maximising the 25-30% of your income (up to €115,000) which you can invest into a pension, and claiming income tax relief along the way.

2. Remember retiring early has a triple effect on your wealth

It’s obvious when you say it, but retiring early has three key effects on your pension wealth.

Firstly, you have less time to pay money into a pension from your employment income.

Secondly, the money has less time to compound and grow before you tap into it, meaning investment returns play a smaller role in growing your pension pot.

Lastly, the earlier you draw your pension, the longer the period you’ll need to spread it out over. Central Statistics Office data indicates that a person in Ireland retiring at age 65 today can expect to live for 18-21 years. For those retiring earlier, a pension could need to last for three or more decades.

3. It’s how you invest as well as what you invest

Pension plans are not all the same.  To maximise your retirement pot, you’ll want to achieve the best combination of low costs, appropriate investment choices, and flexible terms.

For example, if you’re planning on retiring next year, you’ll want to invest your pension funds differently than if hanging up your boots is several decades away.

4. Clear your debts

If you’re exiting the workforce, you’ll almost certainly need to clear any non-mortgage debt. But what about your home loan?  In many cases it will make sense to pay it down aggressively, through overpayments or a one-off lump sum.

Remember that your options to remortgage may become limited once you leave employment, so consider refinancing to a more attractive rate before you leave your job.

5. Plan for day zero

Optimising your pension doesn’t stop at retirement.  There’s loads you can do to improve your financial position in retirement, from investing wisely to reducing the cost of your mortgage, to maximizing your tax position.

Get in touch with Moneycube today to see how we can help you bring forward the day you retire.