Reasons to Invest in a Pension
A Pension is a smarter way to Save. If you like saving money but hate paying tax, you will love retirement savings. Unlike a deposit account where you pay DIRT on any growth, with a pension you can actually claim tax back!
Your income could drop by up to 66% in retirement
When you retire, you’ll probably expect to maintain the same standard of living. However, unless you put a retirement plan in place, your income could drop by nearly 66% when you retire.
The State Pension Contributory is €12,132*, but the average industrial wage is €35,874**.
You need to save for your retirement to help avoid a big drop in income.
* Source: Weekly State Pension Contributory 2016, www.welfare.ie. ** Source: CSO, Average weekly Industrial Wage, Earning and Labour Costs, 31 March 2014.
You may need an income for up to 30 years or more when you retire
You may be retired for up to a third of your life and that’s why it’s so important to have a savings plan that ensures that the money you earn during your working life lasts your whole life.
This means your retirement savings plan is arguably one of the most important savings plans you will ever contribute to. It can provide you with the security of a regular income to ensure a comfortable standard of living for your retirement so that you can relax and enjoy this time.
If you do qualify for the State Pension, you could be 68 before you receive it.
The age of eligibility for the State Pension (Contributory) has changed and no longer starts at age 65. That’s potentially a three year gap in retirement income!
• If you were born on or after 1 January 1955 the minimum qualifying State Pension age will be 67
• If you were born on or after 1 January 1961 the minimum qualifying State Pension age will be 68.
The earlier you start contributing to your pension the better
The sooner you start your pension, the longer it has to potentially grow which could make a big difference to your retirement fund. The table shows how starting pension contributions early can have a significant impact on your retirement fund.