It doesn’t matter whether you’ve just graduated college and are enjoying your first job, or whether you are in your 40s or 50s; it is never too early, or too soon to start a pension.

Of course, the earlier you start, the more time there is to build your pension pot and benefit from long term investment strategies.

Starting early and saving smaller amounts also lessens the impact of your retirement savings as your outgoings increase when you secure a mortgage, have a family and so forth.

However, with the right advice and a strategy tailored to your personal situation, even a pension established later in life can amass a healthy sum to supplement the State pension and help create the lifestyle you want in retirement.

What about the State pension?

The Irish contributory state pension is currently around €13,000 (The Pension Authority, 2021) a year and it doesn’t kick in until you turn 66 (from 2028, the age is set to increase to 68, while those who choose to work until they are 70 will be abl to claim a higher State pension entitlement).

The amount you receive from the State pension will depend on your number of Pay Related Social Insurance [PRSI] contributions. There is also a non-contributory pension for people who haven’t enough PRSI credits, but that pension is means tested.

For most people who want a comfortable retirement – a regular meal out, an annual holiday, and the freedom to spoil their grandkids – the State pension is unlikely to be enough to support their lifestyle in retirement.

So how much DO you need in retirement?

A rule of thumb is to firstly consider the type of lifestyle you would like to enjoy in retirement.

Next, consider whether there is a gap between what you need to support your desired lifestyle, and the State contributory pension.

Finally, keep in mind that any savings you have will need to last 20 years in retirement for women aged 66, and 17 years for males when they retire based on current mortality rates.

It can help to talk with a financial advisor who has experience in retirement planning, and an in-depth knowledge of what tax relief is available on your pension savings, the tax-free amount you can take in a lump sum at retirement, and the type of investments that are a match for your risk profile and retirement goals.

Talk to an expert at Hennelly Finance today on 091 670 123 who can help you plan and achieve the retirement lifestyle you dream of.