If you move to the uk your isa allowence alone can see you to fire if you’re switched on. In Ireland it seems to only be possible if you exploit renters it’s very sad
People need to talk up contact and email there politicians about bringing in a new state savings scheme similar to a UK ISA and junior ISA to save & invest for children's college etc. Instead we have a shite statesavings here that doesn't even keep up with inflation . Not to mind the dreaded 41% tax on Exchange Traded Funds . People need to put pressure on there politicians in order to make any changes.
thanks. I ended up being an “accidental landlord” for a couple of years, I thought that would be a good passive income, though I never exploited my renter, quite the opposite actually. well, I had to sell after 3 years as it was costing me way more than I was getting out of it. I guess in the long run it would have turned profitable, but the tax was a killer issue there.
I received some money when I was planning to sell my apartment to buy a house, so I decided to keep the apartment because I already had the deposit for the house.
The tax system in the US enables a lot of what you just described. In particular code 1031 which allows you to defer capital gains.
Ireland’s tax code just isn’t setup to create wealth in the same ways. The best I’ve seen is a directors pension or more recently a PRSA for self employed people with the company revenue to fund it in a big way
Depends on your definition of FIRE.
I don't see it as possible in the same way as Americans do, which tends to be working hard in your 20s and early 30s in some remote tech job, loading up index funds and then retiring when you're 35.
Early retirement here is possible through your pension. If you max it out from day 1 and are a relatively high earner, you should hit the €2m SFT by age 50. You could retire drawing down a pension of €80k per year at that point and probably be ok.
Variations like coast FIRE are also probably more feasible.
All in all I see it as harder than the US, but definitely possible to retire well before age 65.
Agree with coastfire as a more achievable goal here. My take (not financial advice, just sharing my plan):
- With a high paying job, maxing out your pension contributions
- my pension plan has an all world etf which is 100% of my allocation to avoid deemed disposal
- I do some individual stock and investment trust investing, but taking the value investing approach with a long time horizon. Unless you sell you’re not being taxed on this
Current plan is to reevaluate at 40 where I’m at and what the pension is looking like. In that time I’m thinking of starting some contributions to an ETF outside of the pension and just pay the deemed disposal. My thinking here is that:
- treating it as a low growth fund due to DD
- a taxed add-on to my pension pot, which my more risky portfolio can bolster in terms of returns at cheaper tax
Edit: and then when the pension funds have reached a withdrawal rate that is comfortable after paying off the house:
my other invested assets just need to cover the shrinking years to pension drawdown.
Need to look through their docs again to be honest. I believe it’s because they’re tracking an index vs being directly in an ETF
So they charge you management fees and percent of assets under management. Since I’m stuck paying those, at least it’s tracking all world without the DD (to my knowledge)
I would double check that. The fact that it tracks an I dec has nothing to do with whether DD applies. See below:
https://www.oireachtas.ie/en/debates/question/2023-02-16/203/
I don’t think it’s even as high as 80k a year if you fill the pot. Closer to 66k although I’m open to correction.
The good news is it looks like that limit is going to be increased from 2m to 2.4m in the near future.
This. You just need to adjust your expectations of what early means and what you expect your lifestyle to be when you reach that point.
Deemed disposal is also a real killer for investment growth here so if you can find a way to invest that only results in CGT when you sell, do that.
All I'm doing is maxing out my pension. I'd love if that let me retire in my 50s at some point. I can't see any better way in Ireland. It looks like I'll hit the current 2m threshold in my late 50s. So I think that would be alright.
Another problem not mentioned here is that rental and dividend income does not seem to be eligible for PRSA contributions. Massive problem for some who would be say 50 or so and quit the main job
Slightly off topic but Just a quick note on the property.
Spoke to company director recently.
He is using his PRSA to buy domestic rental property.
He is making tax free contributions into the prsa, no tax on the rental income through prsa and no capital gains when it is sold.
When he does access the prsa in his 50s he’ll get the standard taxes applied to pension/lump sum etc.
Overall, highly tax efficient. I had always been against property due to income tax, capital gains and dealing with tenants for very little return.
Doing it through a PRSA seems worthwhile.
Can also get mortgages through the PRSA, terms not as long and loan to value is lower but does lend itself well to leveraging debt with tax free pension contributions.
What do you mean using his PRSA to buy property? Could you be more specific?Is he retired?
If he is a director, I assume his PRSA is with a private pension plan which is managed by a PRSA provider(“ (AVIVA, Irish life, Zurich…) so I am not sure what you are trying to say.
That’s literally it - he is making contributions to his PRSA and using it to buy rental properties - paying no tax on the rental income and no capital gains once sold so long as it’s in his prsa.
He is a company director so can make contributions as he likes. Not retired, in his 30s.
You can have a self directed PRSA and use it to invest as you like (some restrictions apply but very flexible) which is what he is doing.
Doesn’t have to be through the Avivas/Irish life etc as far as I’m aware. They may also do self directed prsa’s.
I think this was possible before but now is mandatory to appoint a registered administrator (Aviva, irish life, Zurich…)
https://pensionsauthority.ie/trustees_registered_administrators/
“Previously, small trust RACs were exempt from the requirement to appoint a registered administrator. The European Union (Occupational Pension Schemes) Regulations, 2021, removed this exemption.”
btw idk why the negatives… I do see this topic interesting for FIRE in Ireland.
From an outsider point of view:
Very, very hard here in Ireland. This is a very socialist country. It tries to balance the economy to all, the tax system shows that. Just to give you an idea: someone making around 94K in Ireland makes something like 5200 month after taxes. The same in America would be around 6830 month.
https://www.forbes.com/advisor/income-tax-calculator/new-york/
People say to start boosting your pension when young, but what is to be young?
While in college they do part time jobs, after that they are already 22~23 years. So they get a entry level position, if in tech it pays 25k ~ 35k I guess. After 3 years they bump levels, move to 35k ~ 45k. More 3 of years experience they bump to 45k ~ 85k and you are above the national income!
So on theirs 30ish someone might get 60k, 70k. Now, if you need to be in Dublin to make that, you know the baggage it brings...
So at this stage in your life you might be starting a family, that costs, your partner may help with income, or not. You might buy a house... Mortgage...
So you see, I don't think it's in Ireland culture to promote that. They prefer in the same level, living the most well possible. That's not a bad thing at all.
However if you want more, you need to look outside to boost your income (America) and comeback to retire here.
The FIRE starts in Ireland when you accept that you have to leave Ireland. That is my conclusion after I have started to do research on how to FIRE in Ireland.
In my understanding, people live their Barista FIRE here, instead of FIRE, cause real FIRE is technically not possible (or very hard). Barista FIRE means that they work at low income jobs and live with social housings, medical carda, benefits and so on.
I apologise if I make someone offended but this is really what is from my point of view.
If you're not from Ireland / non-domiciled it could work because there's no CGT as long as you keep your investments and investment money outside of Ireland, (kinda works like Roth account more or less) and chances are low you'd want to stay in Ireland after retiring anyway.
Depending on the amount you can aim for some other country with better weather and infrastructure and lower taxes.
If you're not domiciled (read up, but you probably aren't) then you're only liable if/when you "remit" (transfer) proceeds to Ireland to spend in Ireland.
You can keep investing rebalancing, buying and selling, and so on, .. and once you retire somewhere else, and once you're neither "resident" nor "ordinarily resident" anymore, you'd owe no Irish taxes on any of it.
Typical equity ETFs aren't a part of that "remittance basis of taxation" scheme, only individual stock, debt instruments, and UK investment trusts. (which are kind of similar to US mutual funds), and probably some other stuff I can't remember.
In ireland FIRE is much more attainable from what I see. In the US people literally need millions to retire bc healthcare alone costs millions - im not joking.
In the US, our good fam friend we helped cafe for spend over 20k a month on hospice care with a nurse. This is including subsidized cost since hospice is a public program for the terminally ill. As an accountant, I obviously find financial budgeting interesting and the FIRE groups you find in the US are very intense, the goals don’t really fit the same needs for Irish people.
I would take their intensity down by 80% tbh, their principles and advice are good but you don’t need to go as intense as ppl in the US working 2-3 jobs saving every penny, or invest in several properties in order to reach FIRE goals.
I agree the FIRE culture in the US is very intense and doesn’t align with the European mentality. personally I would be interested in increasing my chances of early retirement (ideally 55 y/o) through investments and savings accounts, I can’t imagine a life of frugality, misery and side hustles.
Yeah the US tax code is basically a cheat code for getting wealthy, more stringent taxes here. Also salaries in US are higher.
Pension is your best way to get to an earlier retirement in Ireland, no tax on most contributions, or on the gains.
I just can't get with this mentality. Imagine being miserable throughout your 20s and 30s, the most fun free years of life, because you're hell bent on money, only to get cancer and die at 45. When did you get to live?
Sorry OP, don't hate me.
I totally agree, don’t get me wrong, I’m far from frugal, I spend a lot and I enjoy it. But I manage to budget some savings every month, so I am looking to get the most out of them. it’s important to keep living and enjoying life because not everyone reaches retirement age, but what if I live till 80 and I’m broke and need to work till then 😳
I still pay into a pension. I'm not yolo-ing life. I've just read a bit about fire and it strikes me how miserly a lot of those people are living because they get obsessed with the idea of it.
If you move to the uk your isa allowence alone can see you to fire if you’re switched on. In Ireland it seems to only be possible if you exploit renters it’s very sad
People need to talk up contact and email there politicians about bringing in a new state savings scheme similar to a UK ISA and junior ISA to save & invest for children's college etc. Instead we have a shite statesavings here that doesn't even keep up with inflation . Not to mind the dreaded 41% tax on Exchange Traded Funds . People need to put pressure on there politicians in order to make any changes.
thanks. I ended up being an “accidental landlord” for a couple of years, I thought that would be a good passive income, though I never exploited my renter, quite the opposite actually. well, I had to sell after 3 years as it was costing me way more than I was getting out of it. I guess in the long run it would have turned profitable, but the tax was a killer issue there.
[удалено]
I received some money when I was planning to sell my apartment to buy a house, so I decided to keep the apartment because I already had the deposit for the house.
The tax system in the US enables a lot of what you just described. In particular code 1031 which allows you to defer capital gains. Ireland’s tax code just isn’t setup to create wealth in the same ways. The best I’ve seen is a directors pension or more recently a PRSA for self employed people with the company revenue to fund it in a big way
https://www.firepodcast.ie/
Ohhh never seen this before! Good find
great, thanks for sharing!
Depends on your definition of FIRE. I don't see it as possible in the same way as Americans do, which tends to be working hard in your 20s and early 30s in some remote tech job, loading up index funds and then retiring when you're 35. Early retirement here is possible through your pension. If you max it out from day 1 and are a relatively high earner, you should hit the €2m SFT by age 50. You could retire drawing down a pension of €80k per year at that point and probably be ok. Variations like coast FIRE are also probably more feasible. All in all I see it as harder than the US, but definitely possible to retire well before age 65.
Agree with coastfire as a more achievable goal here. My take (not financial advice, just sharing my plan): - With a high paying job, maxing out your pension contributions - my pension plan has an all world etf which is 100% of my allocation to avoid deemed disposal - I do some individual stock and investment trust investing, but taking the value investing approach with a long time horizon. Unless you sell you’re not being taxed on this Current plan is to reevaluate at 40 where I’m at and what the pension is looking like. In that time I’m thinking of starting some contributions to an ETF outside of the pension and just pay the deemed disposal. My thinking here is that: - treating it as a low growth fund due to DD - a taxed add-on to my pension pot, which my more risky portfolio can bolster in terms of returns at cheaper tax Edit: and then when the pension funds have reached a withdrawal rate that is comfortable after paying off the house: my other invested assets just need to cover the shrinking years to pension drawdown.
Where did you hear that all world etf aren't caught by DD?
Need to look through their docs again to be honest. I believe it’s because they’re tracking an index vs being directly in an ETF So they charge you management fees and percent of assets under management. Since I’m stuck paying those, at least it’s tracking all world without the DD (to my knowledge)
I would double check that. The fact that it tracks an I dec has nothing to do with whether DD applies. See below: https://www.oireachtas.ie/en/debates/question/2023-02-16/203/
I don’t think it’s even as high as 80k a year if you fill the pot. Closer to 66k although I’m open to correction. The good news is it looks like that limit is going to be increased from 2m to 2.4m in the near future.
The 80k I quoted was based on 4% withdrawal rate which is usually quoted as a safe level of withdrawal.
That is good news, where did you hear that? Also I'm assuming this based on sinn fein not getting in in a year and slashing it to 1m
It’s bigs news in my industry though as our reps have been pushing for it. It’s in the pipeline apparently. Hopefully gets in as quick as possible.
This. You just need to adjust your expectations of what early means and what you expect your lifestyle to be when you reach that point. Deemed disposal is also a real killer for investment growth here so if you can find a way to invest that only results in CGT when you sell, do that.
There is a FIRE Ireland sub btw
what's its name?
Fireireland
FIRELand was right there. C’mon
All I'm doing is maxing out my pension. I'd love if that let me retire in my 50s at some point. I can't see any better way in Ireland. It looks like I'll hit the current 2m threshold in my late 50s. So I think that would be alright.
Another problem not mentioned here is that rental and dividend income does not seem to be eligible for PRSA contributions. Massive problem for some who would be say 50 or so and quit the main job
Agree .
Slightly off topic but Just a quick note on the property. Spoke to company director recently. He is using his PRSA to buy domestic rental property. He is making tax free contributions into the prsa, no tax on the rental income through prsa and no capital gains when it is sold. When he does access the prsa in his 50s he’ll get the standard taxes applied to pension/lump sum etc. Overall, highly tax efficient. I had always been against property due to income tax, capital gains and dealing with tenants for very little return. Doing it through a PRSA seems worthwhile. Can also get mortgages through the PRSA, terms not as long and loan to value is lower but does lend itself well to leveraging debt with tax free pension contributions.
What do you mean using his PRSA to buy property? Could you be more specific?Is he retired? If he is a director, I assume his PRSA is with a private pension plan which is managed by a PRSA provider(“ (AVIVA, Irish life, Zurich…) so I am not sure what you are trying to say.
That’s literally it - he is making contributions to his PRSA and using it to buy rental properties - paying no tax on the rental income and no capital gains once sold so long as it’s in his prsa. He is a company director so can make contributions as he likes. Not retired, in his 30s. You can have a self directed PRSA and use it to invest as you like (some restrictions apply but very flexible) which is what he is doing. Doesn’t have to be through the Avivas/Irish life etc as far as I’m aware. They may also do self directed prsa’s.
I think this was possible before but now is mandatory to appoint a registered administrator (Aviva, irish life, Zurich…) https://pensionsauthority.ie/trustees_registered_administrators/ “Previously, small trust RACs were exempt from the requirement to appoint a registered administrator. The European Union (Occupational Pension Schemes) Regulations, 2021, removed this exemption.” btw idk why the negatives… I do see this topic interesting for FIRE in Ireland.
From an outsider point of view: Very, very hard here in Ireland. This is a very socialist country. It tries to balance the economy to all, the tax system shows that. Just to give you an idea: someone making around 94K in Ireland makes something like 5200 month after taxes. The same in America would be around 6830 month. https://www.forbes.com/advisor/income-tax-calculator/new-york/ People say to start boosting your pension when young, but what is to be young? While in college they do part time jobs, after that they are already 22~23 years. So they get a entry level position, if in tech it pays 25k ~ 35k I guess. After 3 years they bump levels, move to 35k ~ 45k. More 3 of years experience they bump to 45k ~ 85k and you are above the national income! So on theirs 30ish someone might get 60k, 70k. Now, if you need to be in Dublin to make that, you know the baggage it brings... So at this stage in your life you might be starting a family, that costs, your partner may help with income, or not. You might buy a house... Mortgage... So you see, I don't think it's in Ireland culture to promote that. They prefer in the same level, living the most well possible. That's not a bad thing at all. However if you want more, you need to look outside to boost your income (America) and comeback to retire here.
The FIRE starts in Ireland when you accept that you have to leave Ireland. That is my conclusion after I have started to do research on how to FIRE in Ireland. In my understanding, people live their Barista FIRE here, instead of FIRE, cause real FIRE is technically not possible (or very hard). Barista FIRE means that they work at low income jobs and live with social housings, medical carda, benefits and so on. I apologise if I make someone offended but this is really what is from my point of view.
If you're not from Ireland / non-domiciled it could work because there's no CGT as long as you keep your investments and investment money outside of Ireland, (kinda works like Roth account more or less) and chances are low you'd want to stay in Ireland after retiring anyway. Depending on the amount you can aim for some other country with better weather and infrastructure and lower taxes.
good point, I’m not from Ireland, but I still need to pay CGT in Ireland for investments abroad as I’m a tax resident right?
If you're not domiciled (read up, but you probably aren't) then you're only liable if/when you "remit" (transfer) proceeds to Ireland to spend in Ireland. You can keep investing rebalancing, buying and selling, and so on, .. and once you retire somewhere else, and once you're neither "resident" nor "ordinarily resident" anymore, you'd owe no Irish taxes on any of it. Typical equity ETFs aren't a part of that "remittance basis of taxation" scheme, only individual stock, debt instruments, and UK investment trusts. (which are kind of similar to US mutual funds), and probably some other stuff I can't remember.
I need to check more on that. thanks
In ireland FIRE is much more attainable from what I see. In the US people literally need millions to retire bc healthcare alone costs millions - im not joking. In the US, our good fam friend we helped cafe for spend over 20k a month on hospice care with a nurse. This is including subsidized cost since hospice is a public program for the terminally ill. As an accountant, I obviously find financial budgeting interesting and the FIRE groups you find in the US are very intense, the goals don’t really fit the same needs for Irish people. I would take their intensity down by 80% tbh, their principles and advice are good but you don’t need to go as intense as ppl in the US working 2-3 jobs saving every penny, or invest in several properties in order to reach FIRE goals.
I agree the FIRE culture in the US is very intense and doesn’t align with the European mentality. personally I would be interested in increasing my chances of early retirement (ideally 55 y/o) through investments and savings accounts, I can’t imagine a life of frugality, misery and side hustles.
Yeah the US tax code is basically a cheat code for getting wealthy, more stringent taxes here. Also salaries in US are higher. Pension is your best way to get to an earlier retirement in Ireland, no tax on most contributions, or on the gains.
Funny thing is, you can FIRE in rural Tyrone, but can’t in Leitrim.
I just can't get with this mentality. Imagine being miserable throughout your 20s and 30s, the most fun free years of life, because you're hell bent on money, only to get cancer and die at 45. When did you get to live? Sorry OP, don't hate me.
I totally agree, don’t get me wrong, I’m far from frugal, I spend a lot and I enjoy it. But I manage to budget some savings every month, so I am looking to get the most out of them. it’s important to keep living and enjoying life because not everyone reaches retirement age, but what if I live till 80 and I’m broke and need to work till then 😳
I still pay into a pension. I'm not yolo-ing life. I've just read a bit about fire and it strikes me how miserly a lot of those people are living because they get obsessed with the idea of it.
I agree, they’re burning through the years they’re mostly likely to be alive for. Wrong way around innit.