Set a target
A common rule of thumb is that you can take about 4% of your pension each year in retirement. Turned around, that means you need about 25 times the yearly income you want from it:
| Income you want from your pension | Target pot |
|---|---|
| €10,000 a year | €250,000 |
| €20,000 a year | €500,000 |
| €30,000 a year | €750,000 |
That’s on top of the State Pension (Contributory), which starts at 66 if you have enough PRSI contributions.
Start as early as you can
The same habit adds up to very different amounts, because money saved early has longer to grow:
- Starting at 25 About €14,194 a year at 4%
- €354,855
- Starting at 35 About €9,509 a year at 4%
- €237,728
- Starting at 45 About €5,366 a year at 4%
- €134,161
Starting at 25 instead of 45 gives you about 2.6 times as much
Assumes 3% pay rises a year and steady average growth after fees. Today’s money takes off inflation, so the figures show what the savings would buy now.
Try your own numbers:
After 30 years you’d have
€200,903
- You put in€72,000
- Growth€128,903
Start ten years later and you’d have €92,408: €108,495 less, though you’d only put in €24,000 less.
Returns aren’t guaranteed and vary from year to year. This assumes the same return every year, before fees and tax.
How much to put in
- Join your employer’s scheme, or stay in auto-enrolment, so your employer pays in too.
- Use the tax relief. In a workplace or personal pension, contributions get relief at 20% or 40%, on up to a share of your pay that rises with age: 15% under 30, up to 40% from 60.
- Raise it each year, for example by 1% of your pay, or each time you get a pay rise.
- When you retire, you can usually take 25% as a lump sum, and the first €200,000 is tax-free.
More on how the new system works in auto-enrolment explained.
Work out your own number
Our pension calculator shows what your pension could grow to, with tax relief or auto-enrolment. Once you know your target, the pension drawdown calculator shows how long a pot could last in retirement.