People are living longer than ever before, but their money is not always keeping pace.
That is one of the biggest financial issues quietly sitting in the background for so many Irish people right now. We are healthier, we are working longer, and retirement is no longer a short chapter at the end of life. Many people could spend 20, 25, or even 30 years in retirement, yet surprisingly few have sat down and worked out what that might actually cost.
I think people are often shocked when they realise how little the State pension alone provides. At the moment, the full contributory State pension is just over €277 per week. While that absolutely helps, for most people it is not enough on its own to maintain the lifestyle they are used to, especially when you factor in rising bills, inflation, healthcare costs, and simply the cost of living in Ireland now.
Between mortgages, childcare, school costs and the general cost of life in Ireland, pensions often end up at the bottom of the list. A lot of people still think retirement planning is something you start thinking about ‘later’. Later when the kids are older. Later when the mortgage eases. Later when work calms down. But the reality is that later comes quickly, and the difference between starting a pension at 35 versus 45 can potentially result in a significantly larger pension pot by retirement age.
I regularly meet people in their fifties who genuinely thought they were ‘grand’ until they actually sat down and looked at the numbers. Most are not reckless with money. They simply never had anyone explain retirement planning in a way that felt realistic or achievable.
Compound growth sounds like financial jargon, but it is actually quite simple. It means that your money starts earning money too. If you invest €100 and it grows by five per cent, you now have €105. The following year, you are earning growth on €105 rather than the original €100. Over years and decades, that snowball effect becomes incredibly powerful. That is why starting earlier, even with smaller amounts, can often leave somebody in a much stronger position than someone trying to catch up later with larger contributions.
The same applies in reverse with inflation. Money sitting in a current account might feel safe, but if it is not growing, inflation is quietly eating away at it in the background. €100,000 sitting in cash today simply will not buy the same lifestyle in twenty years’ time if the cost of living continues to rise.
When clients come in to us for a financial review, we usually start at the finish line and work backwards. Instead of asking people what they think they can afford to put into a pension now, we ask what kind of lifestyle they want later on. A common rule of thumb is aiming for a retirement income of roughly 70 to 75 percent of your current salary in order to maintain a similar standard of living.
For example only, and not financial advice, if a couple currently earns a combined salary of €100,000, we may aim for a retirement income of around €75,000 between them. One way of estimating the pension fund required is multiplying that figure by approximately 24, which would suggest a target fund in the region of €1.8 million. Suddenly retirement stops feeling vague and becomes something much more tangible and real.
From there, we work backwards. We factor in what State pension entitlements may look like, any existing work pensions, old pensions from previous jobs, savings, investments, and even property assets. Many people have pensions scattered across old employments and have no idea what they contain or how they are performing. Part of our role is helping clients find those pensions, review them, and understand whether they still suit their goals and timelines. Many people in Ireland are asset rich on paper but pension poor in reality, particularly those who may own property but have not built enough retirement income outside of it.
Retirement planning is rarely just one pension pot. It is more like a four pillar structure. You may have your State pension, private pensions, savings and investments, and property or other assets all contributing towards your retirement lifestyle. For some people, there may also be future inheritance or business assets involved. The key is making sure those pieces are actually working together rather than sitting in isolation.
That does not always mean starting from scratch. Sometimes it is about amending what is already there. In some cases, we may recommend increasing pension contributions. In others, it might involve reviewing investment strategy or setting up additional savings and investment plans alongside pension contributions to improve flexibility later on.
What surprises many people is how tax efficient pensions can actually be in Ireland. If you are paying tax at 40 percent, a €1,000 pension contribution may effectively only cost you around €600 after tax relief. For business owners and self-employed individuals, pensions can also become a very valuable long-term planning tool. Many business owners spend years reinvesting back into the business while neglecting their own retirement planning in the process. Pension contributions can offer significant tax advantages while also building personal financial security outside of the business itself.
One of the biggest issues I see is people being either too cautious or too overwhelmed to start. Some are afraid to invest because they think it means taking huge risks. Others have pensions they have not reviewed in years and genuinely have no idea what they are invested in. Many people are sitting in default funds that may not actually suit their stage of life or retirement goals.
This is where advice becomes important, because there is no one size fits all approach. Someone in their thirties may be able to take a very different level of investment risk compared to somebody planning to retire in five years’ time. For clients approaching retirement, we are often looking more closely at structure and accessibility. How much should stay in cash? How much should remain invested? What level of monthly income will realistically be needed? Many people are surprised to learn that pensions can often be accessed from age 50 once they have left that employment, which makes timing and planning incredibly important.
The reality is that retirement is no longer something that ‘just works itself out’. Defined benefit pensions are far less common, people are living longer, and the cost of living continues to rise. Hoping things will somehow fall into place is not a strategy.
The good news is that you do not need to fix everything overnight. A pension review, increasing contributions slightly, understanding what you currently have, or even just having the conversation is a huge step forward. Small changes made consistently over time can completely change outcomes later on.
Because at the end of the day, retirement planning is not really about numbers on a page. It is about freedom. Freedom to slow down when you want to, not because you are forced to. Freedom to enjoy your life without financial panic. The ability to make choices on your own terms.
And ultimately, that is the pension gap nobody talks about. It is not just the gap in money. It is the gap between the future people hope for and the plan they currently have in place to support it.
Halpin Wealth Management offers free consultations. Visit www.hwm.ie or email info@hwm.ie to learn more.
