Q – My PRSA has only € 158,000 in it and I am due to retire next September 2024 when I hit 66. I have been told I will receive very little by way of a monthly pension and coupled with the State pension, am scared that I just simply won’t be able to afford to retire. Finding a job as a single man at this age is not easy but I may have to. How can I maximise my PRSA fund ?  David – Galway

A – While I am a great advocate of starting a pension David as early as you can, I am also an advocate for getting to grips with how the pension system works as early as one can too. Like a bricklayer laying brick upon brick but without having to see the bigger picture, most pension investors are happy to make minimum contributions not knowing what the consequences will be. The end game is just so important as you are now unfortunately experiencing. With only a fund of € 158,000, you can take 25% or € 39,500 as a tax free lump sum and invest the balance of € 118,500 into an Approved Retirement Fund (ARF) or an annuity – the latter essentially a fixed interest rate monthly income guaranteed for life. When you die, the insurance company keeps this fund as you have only been receiving the fixed interest rate up to then. You are therefore buying a guaranteed income for life – the ideal of course is to live as long as possible and outlive the annuity ! Taking a current annuity rate of c. 4%, this equates to € 395 per month and even with the annual State pension of € 15,563.60, a total of c.€ 20,303.60 taxable per annum, you may need to supplement your income with a little part time job. Choosing the ARF route may be the better option too as you can grow your ARF especially where the annuity is only guaranteed the first 5 years generally. If you die in the 6th year, the insurance company keeps the annuity fund not your estate. Email me for details. Take expert professional advice and very best of luck David in your retirement.


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