How Much Do You Need to Retire at 55 in Ireland?

At Chartered Capital, we’ve had countless conversations with clients who dream of retiring early. For many, age 55 is a target – a milestone that offers freedom, health, and time to enjoy life beyond work. But retiring early is more than a dream; it can be a reality. This reality requires planning, discipline, and a clear financial roadmap.

Let’s consider a financial goal of achieving a monthly gross income of €5,000 in today’s terms, with the aim of retiring at 55 and sustaining that income for the rest of your life. This goal requires careful planning, including establishing a sufficient retirement fund and considering factors like inflation and investment returns.

The Impact of Inflation and Longevity

A key challenge in early retirement planning is longevity risk – the possibility that you live longer than expected and outlive your funds. Inflation adds complexity, eroding the value of your money over time. To sustain a gross yearly income of €60,000, in today’s money, this will require you to:

• Withdraw sufficient income in the early years before the State Pension kicks in.
• Preserve your retirement fund over 35+ years to age 90, adjusting withdrawals annually to keep pace with inflation.

For planning purposes, we assume:

• 3% inflation
• 4.5% average investment return
• A real discount rate of approximately 1.46% (This 1.46% real rate is used to discount future, inflation-adjusted withdrawals back to their present value)

How Much Do You Really Need?

Retirement can be broken down into two phases:

Phase 1: Age 55 to 66 (Pre-State Pension)

• Annual income needed: €60,000 (in today’s money)
• Duration: 11 years
• Total present value: ~€605,800

Phase 2: Age 66 to 90 (Post-State Pension)

• State Pension (Contributory): approx. €14,500/year
• Annual shortfall to be covered by your retirement fund: €45,500 (in today’s money)
• Duration: 24 years
• Total present value (discounted to age 55): ~€781,300

Estimated Total Retirement Fund Required at 55: ~ €1.39 million

This figure reflects the real value of your retirement needs, adjusted for inflation and investment growth. It assumes you want to maintain a consistent lifestyle throughout retirement.

Five Key Actions to Take Today

1. Know Your Number and Revisit It Regularly. Start with a clear target – around €1.39 million in today’s money. While this may seem like a daunting target initially, with the help of an early implementation of a solid financial plan, this can be achieved. Using financial planning tools or working with an adviser to model different scenarios to adjust your needs annually will add significantly to achieving your goal.
2. Maximise Pension Contributions. Pensions are one of the most tax-efficient ways to build wealth in Ireland. Max out your annual allowance and consider AVCs or PRSAs if you’re self-employed or a company director.
3. Invest for Growth, Not Just Security. Your portfolio needs to grow to support decades of withdrawals. Balance capital preservation with inflation-beating growth through diversified investments.
4. Plan for the Gap Years (55–66). These 11 years must be fully funded from your own assets. Consider a separate drawdown pot or phased pension access to bridge the gap before the State Pension begins.
5. Stress-Test Your Plan. Model conservative scenarios: lower returns, higher inflation, unexpected expenses. Build in flexibility and maintain a margin of safety.

Final Thoughts

Retiring at 55 on a gross of tax passive income of €60,000 in Ireland is absolutely achievable, but it’s not a one-time calculation. It requires clarity, commitment, and above all, ongoing financial and tax planning. While a target fund of approximately €1.39 million (in today’s money) provides a solid starting point, it’s important to recognise that this figure is based on assumptions that may change over time.

Investment returns, inflation, tax laws, pension rules, and personal circumstances can all shift, sometimes significantly. That’s why early retirement planning isn’t just about hitting a number; it’s about building a flexible, resilient strategy that can adapt to life’s uncertainties.

Work with a qualified financial planner, ideally a CFP® Professional, to regularly review your plan, stress-test different scenarios, and optimise your tax position. With the right structure and support, you can turn your early retirement dream into a sustainable, confident reality.

If you’d like to book an appointment, or simply have a chat about your financial goals, we’d be happy to help.