When planning for retirement income, your net after-tax income will determine whether or not you can afford the lifestyle you would like to enjoy.
When a client reaches age 65, and later when they are eligible to receive the State Pension, a number of tax reliefs and benefits kick in:
*At least one aged 65 or over
The resulting tax savings for the over 65s can be significant.
Take an example of a married couple, one income. Let’s take a target of a 50% gross income replacement in retirement. This is inclusive of the full State Pension (Contributory) at €470.80 per week, so that the balance of retirement income will come from private pensions, annuities and or ARF/AMRF withdrawals*
Married couple, one income
A few surprising facts emerge
€60,000 income for a working couple under age 65 gives rise to a total tax liability of €14,593; however, a retired couple over age 65 with €60,000 income, pays taxes of €11,603 pa (€2,990 pa less than the under 65 couple with the same income
The figures for a single person are broadly similar
Assuming the current taxation system retains the same, retirees over 65 will benefit from a significant reduction in tax on their income.
This means that a 50% target gross income replacement in retirement will replace about 2/3rds of their net income, the difference being the tax “bounce” which the over 65s get.
Whatever your desired level of income in retirement, taking these and other factors into account within a structured plan can provide you with a level of comfort and reassurance – we are here to assist, so get in touch at email@example.com or call 01-2375500.
The marketing material is not intended to provide advice and is provided for general information purposes only. The particular tax treatment contained herein is based on Harvest Financial Services Limited’s understanding of current Revenue practice as at February 2021. Please note that the tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should take such independent tax advice as you deem appropriate.