BY JOHN ELLIS, FINANCIAL ADVISOR
For many people, turning 65 no longer means an abrupt end to working life. Some picture themselves on the golf course or minding grandchildren, while others have no intention of stopping. A growing number are choosing a gradual slowdown, taking on part-time or consultancy work while reducing hours over time and depending more on their pension.
This ‘long goodbye’ to full-time work is becoming more common. Central Statistics Office (CSO) figures show the number of people over 65 still in employment has more than quadrupled in the past 25 years, rising from 33,200 in 1998 to 137,100 by 2025. Sixty-five is no longer seen as the automatic finish line.
From June 29, the Employment (Contractual Retirement Ages) Act 2025 gave employees greater protection. If your contract says you must retire at 65, you can now formally tell your employer you want to continue working until you reach the State pension age of 66. The request must be made between three months and one year before your contractual retirement date. Your employer cannot simply refuse without valid reasons, but they are not obliged to agree. They can turn down the request if they have genuine business reasons that can be defended.
Even if you secure the right to stay until 66, extending beyond that age still depends on your employer’s agreement. The new law is designed only to bridge the one-year gap between typical occupational pension ages and the State pension. It does not create an automatic right to work into your late 60s or beyond.
If you continue working, timing your State pension is important. You can claim it from 66, even if you keep working. Alternatively, you can defer it until age 70 and receive a higher weekly payment, rising from €299.30 to €363.90 for those with full contributions (see my article, Does Deferring Your State Pension Add Up?, where I ran the calculations for you).
Deferring your pension has an additional cost. Since 2024, people who continue working after 66 must pay PRSI at 4.2%. Someone earning €60,000 could face an extra €2,520 a year in contributions they previously avoided. For some, especially those with gaps in their contribution record, deferring makes sense to build up entitlements. For others, the immediate loss of income and ongoing PRSI bill may outweigh the higher eventual pension.
Your occupational or personal pension rules are equally important. With a PRSA, benefits must be taken before age 75. Buy-out bonds and occupational pensions are usually accessed at the normal retirement age stated in the contract, typically between 60 and 70.
It may be possible to work past this age without drawing down benefits, but this must be negotiated and agreed with your employer. Having multiple pension pots can offer flexibility for tax planning and inheritance, but not all pension structures allow this easily.
Delaying access to your pension can allow further investment growth and potentially a larger tax-free lump sum later. However, once money moves into an Approved Retirement Fund (ARF), imputed distribution rules apply, requiring annual withdrawals of 4–5%. This can create unwanted tax bills even if you do not need the income.
Experts stress that building a sustainable post-65 working life takes time. Starting to look at non-executive or consultancy roles in your late 50s or early 60s gives you a stronger position than trying to begin from scratch at 65 or 66.
While continuing to work can bring financial security, social connection and a sense of purpose, the combination of legal limits, pension access rules and ongoing costs such as PRSI means careful planning is vital. Those who treat the new freedoms as an automatic right to work indefinitely, or who defer pensions without running the numbers, risk unpleasant financial surprises later.
Working longer can make financial sense, but it is rarely as straightforward as simply delaying retirement. Pension rules, PRSI and employer policies all need to be considered together.
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