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FAQs
Pension Planning
The maximum rate for the State Contributory Pension is €277.30 per week for a single person as of 2024. This pension starts at age 66 for the contributory pension and age 67 for the non-contributory pension​.Â
A defined benefit pension provides a fixed benefit based on salary and length of service, whereas a defined contribution pension depends on the amount contributed and the performance of the investment fund​.
It’s not scientific but aim to have a minimum of 10 times your salary by retirement age. For example, by age 30, you should have 1x your salary, and by age 60, you should have 8x your salary. This will help keep you on trackÂ
Pension contributions in Ireland benefit from income tax relief at the marginal rate, tax-free growth of the pension fund, and a tax-free lump sum upon retirement.Â
A Personal Retirement Savings Account (PRSA) is often recommended for flexibility and tax efficiency. Options vary, so consider fund choices and costs when selecting a plan​.Â
Financial Planning
Financial planning helps individuals manage their finances, prepare for future expenses, and achieve financial goals, ensuring financial security and peace of mind.
It’s recommended to review your financial plan annually or whenever there are significant changes in your financial situation, such as a new job, marriage, or the birth of a child.
A financial advisor helps clients create and manage a financial plan, offering advice on investments, savings, retirement planning, and tax strategies.
A comprehensive financial plan includes budgeting, savings, investments, life insurance, tax planning, and retirement planning.Â
Start by setting retirement goals, assessing your current financial situation, and contributing to pension schemes or retirement accounts like PRSAs.
Diversification involves spreading investments across different asset classes to reduce risk and enhance returns. It’s the principle of not having all your eggs in one basket.Â
Mortgage Protection
Mortgage protection insurance pays off your mortgage if you die before it’s fully repaid, ensuring your family can stay in the home.
It’s typically required by lenders for home loans, but you can shop around for the best policy rather than relying on the lender’s offer.
Yes, having an independent policy allows you to transfer it if you switch lenders, avoiding the need for a new medical examination.
Independent policies often offer better rates and flexibility compared to lender-provided policies.
Generally, premiums for mortgage protection insurance are not tax-deductible.
You can cancel your mortgage protection policy once the mortgage is fully paid off.
Life Insurance and Serious Illness Covers
Life insurance pays out upon death, while serious illness cover pays a lump sum if you are diagnosed with a specified serious illness.
The amount depends on factors such as your income, debts, living expenses, and future financial goals for your dependents.
Yes, you can hold multiple policies to cover different needs and financial obligations.
Coverage typically includes major illnesses like cancer, heart attack, and stroke, but the specific illnesses covered can vary by policy.
The term should ideally cover the period until major financial obligations, such as mortgages and dependents’ education, are met.
Life insurance payouts are generally not subject to income tax, but they may be subject to inheritance tax depending on the beneficiary.
Income Protection
Income protection insurance provides a percentage of your income if you can’t work due to illness or injury.
Typically, policies cover 66-75% of your income, depending on the terms and conditions.
Yes, benefits from income protection insurance are generally subject to income tax.
Coverage can last until you are able to return to work, reach retirement age, or the end of the policy term.
Policies usually have waiting periods ranging from 4 weeks to 52 weeks before benefits are paid.
Yes, you can customise the coverage amount, waiting period, and benefit period to suit your needs.
Inheritance Planning
Strategies include gifting assets during your lifetime, utilising business and agricultural reliefs, and structuring your Will to maximise tax-free thresholds.
It differs from country to country, so find out what’s applicable in the jurisdictions where you hold assets. It’s often advisable to have a separate Will or codicil for assets in different jurisdictions to ensure compliance with local laws.Â
An executor administers the estate according to the Will, ensuring debts are paid and assets are distributed to beneficiaries.
Trusts can help manage and protect assets, provide for minors, and potentially reduce inheritance tax.
Probate assets are those that go through the legal process of probate, while non-probate assets pass directly to beneficiaries, such as life insurance payouts and jointly owned properties.
Inheritance tax, or Capital Acquisitions Tax (CAT), is levied on the value of gifts and inheritances above certain thresholds, with rates and exemptions varying based on the relationship to the deceased.
Mortgages
In Ireland, you can choose from fixed-rate mortgages, variable-rate mortgages, and split mortgages. Each type has its own benefits, so it’s essential to consult with a mortgage advisor to determine which is best for your situation.
The amount you can borrow depends on your income, existing debts and your proven repayment capacity (rent, savings etc.), typically, lenders in Ireland allow you to borrow up to 3.5 times your gross annual income (4 times for first time buyers), but this can vary depending on a number of factors. Consult with a mortgage advisor for a personalized assessment.
A fixed-rate mortgage offers a set interest rate for a specified period, providing stability in your repayments. A variable-rate mortgage, however, has an interest rate that can change, potentially offering lower rates but with more uncertainty. Your mortgage advisor can help you weigh the pros and cons of each.
In addition to your monthly repayments, you must consider costs such as a deposit (usually 10% of the property price), valuation fees, legal fees, and stamp duty. Your mortgage advisor can provide a detailed breakdown of these costs. You will also be required to have home insurance and mortgage protection as ongoing costs.
To improve your chances, maintain a good credit score, save for a larger deposit, reduce existing debts, and have stable employment. Providing comprehensive documentation and consulting with a mortgage advisor can also enhance your approval prospects and help you to prepare for your application.
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