Irish adults think they'll need an average of €40,860 per year in retirement
Adults in Ireland who have yet to retire think they'll need an average of €40,860 per year to get by in retirement, equivalent to about three-quarters of the average Irish wage.
In a nationwide survey of 900 non-retirees, Royal London Ireland found that men believe they'll need significantly more than women, expecting to require €44,000 on average, compared to €38,000 for women.
The vast majority (97%) of people who have yet to retire in Ireland believe that the state pension alone is not enough to get by on in retirement.
“People often underestimate the amount of savings required for a comfortable retirement – as well as the expenses they will face during this phase of life," said Mary Reilly, pension proposition lead at Royal London Ireland.
"Our research found that, on average, people believe they will need €40,860 a year in retirement.
"Given that a report published in 2024 found that a single person would need a pension of €33,600 a year, and that a couple would need €43,200 a year for a comfortable retirement, even allowing for inflation since then, the €40,860 income doesn’t seem that far off the mark.
"However, whether or not people can secure whatever annual pension they are expecting will really depend on how they approach pension saving."
While most people don't expect to get by on the state pension, a recent CSO report found that a third of workers don't have a private pension.
Taking the average amount of income which the survey found people expect in retirement (€40,860), Royal London Ireland calculated how much saving would be required to hit that target, assuming that the individual qualifies for the full state pension, which is currently €15,564 per year.
To achieve a retirement income of €40,860 by the current state pension age of 66, an individual on a salary of €61,908 who starts their pension at the age of 30 would need to save the equivalent of 22% of their salary a year – the equivalent of €1,135 a month.
If the individual was 35 when they started saving into their pension, they would need to save the equivalent of 27% of their salary a year -- the equivalent of €1,393 a month.
If that individual started their pension at the age of 40, they would need to save the equivalent of 34% of their salary a year – the equivalent of €1,754 a month.
“People’s aspirations of the income they will need in retirement often don’t match up to what their pension savings will deliver," said Reilly.
"Previous research by Royal London Ireland found that three-quarters of people underestimate the amount they would need to fund a modest pension in retirement.
"People’s lack of awareness of how much it would take to secure a modest pension means many are unlikely to put enough aside in pension contributions through their working life.”
According to the Royal London Ireland survey, one in ten (10%) expect to need between €75,000 and €100,000 a year or more.
The research also found that expectations of the amount of money needed in retirement vary widely, depending on age, gender, marital status and where an individual is living.
Men (9%) are almost twice as likely as women (5%) to say they would need an income of €100,000 plus when they retire.
More than twice as many women (5%) as men (2%) expect to be able to get by on the equivalent of the state pension in retirement, with the working class (6%) three times as likely as the middle class (2%) to say the same.
Those aged between 25 and 34 believe they will need the most income in retirement, with this age cohort expecting to need an annual income of €48,443 on average when they retire.
At €41,289 on average, those aged 18-24 had the second highest expectations of the amount of income they would need in retirement.
The level of income people think they require decreases with age. Respondents aged 55-64 believe they will need the least amount of money when they retire (€33,701) compared to 45-54 year-olds (€38,896) and 35-44 year-olds (€41,103).
Single people ‘lowball’ what they’ll need in retirement compared to their peers who are in relationships, with the average singleton expecting to need €37,882 in retirement compared to an average of €42,171 for married individuals.
Divorced, separated or widowed individuals expect to need more income in retirement than their married counterparts, with €45,381 being the average income which this group expect to need at retirement, compared to €42,171 for married individuals.
Those with children (€39,272) expect to need more than people who don't have children (€43,078), and those living in urban areas (€42,852) believe they'll need more than people in rural areas (€36,316).
“It’s clear from our survey that some people ‘highball’ the amount of income they’re likely to need in retirement and that others ‘lowball’ it," said Reilly.
"There can be many things shaping people’s expectations around the income they will need in retirement – such as their standard of living and income during their working life, their age, their marital status, and even the cost of living in a rural area versus an urban area.
Regardless of what is influencing one’s expectations of the amount of money they’ll need in retirement, these expectations must be reasonable and realistic.
"It’s crucial that people have a realistic understanding of their financial needs and the time available to build sufficient savings to cover what they’ll need in retirement. Otherwise, they could be in for a significant financial shock when they retire and could even struggle to make ends meet."
In a nationwide survey of 900 non-retirees, Royal London Ireland found that men believe they'll need significantly more than women, expecting to require €44,000 on average, compared to €38,000 for women.
The vast majority (97%) of people who have yet to retire in Ireland believe that the state pension alone is not enough to get by on in retirement.
“People often underestimate the amount of savings required for a comfortable retirement – as well as the expenses they will face during this phase of life," said Mary Reilly, pension proposition lead at Royal London Ireland.
"Our research found that, on average, people believe they will need €40,860 a year in retirement.
"Given that a report published in 2024 found that a single person would need a pension of €33,600 a year, and that a couple would need €43,200 a year for a comfortable retirement, even allowing for inflation since then, the €40,860 income doesn’t seem that far off the mark.
"However, whether or not people can secure whatever annual pension they are expecting will really depend on how they approach pension saving."
While most people don't expect to get by on the state pension, a recent CSO report found that a third of workers don't have a private pension.
Taking the average amount of income which the survey found people expect in retirement (€40,860), Royal London Ireland calculated how much saving would be required to hit that target, assuming that the individual qualifies for the full state pension, which is currently €15,564 per year.
To achieve a retirement income of €40,860 by the current state pension age of 66, an individual on a salary of €61,908 who starts their pension at the age of 30 would need to save the equivalent of 22% of their salary a year – the equivalent of €1,135 a month.
If the individual was 35 when they started saving into their pension, they would need to save the equivalent of 27% of their salary a year -- the equivalent of €1,393 a month.
If that individual started their pension at the age of 40, they would need to save the equivalent of 34% of their salary a year – the equivalent of €1,754 a month.
“People’s aspirations of the income they will need in retirement often don’t match up to what their pension savings will deliver," said Reilly.
"Previous research by Royal London Ireland found that three-quarters of people underestimate the amount they would need to fund a modest pension in retirement.
"People’s lack of awareness of how much it would take to secure a modest pension means many are unlikely to put enough aside in pension contributions through their working life.”
According to the Royal London Ireland survey, one in ten (10%) expect to need between €75,000 and €100,000 a year or more.
The research also found that expectations of the amount of money needed in retirement vary widely, depending on age, gender, marital status and where an individual is living.
Men (9%) are almost twice as likely as women (5%) to say they would need an income of €100,000 plus when they retire.
More than twice as many women (5%) as men (2%) expect to be able to get by on the equivalent of the state pension in retirement, with the working class (6%) three times as likely as the middle class (2%) to say the same.
Those aged between 25 and 34 believe they will need the most income in retirement, with this age cohort expecting to need an annual income of €48,443 on average when they retire.
At €41,289 on average, those aged 18-24 had the second highest expectations of the amount of income they would need in retirement.
The level of income people think they require decreases with age. Respondents aged 55-64 believe they will need the least amount of money when they retire (€33,701) compared to 45-54 year-olds (€38,896) and 35-44 year-olds (€41,103).
Single people ‘lowball’ what they’ll need in retirement compared to their peers who are in relationships, with the average singleton expecting to need €37,882 in retirement compared to an average of €42,171 for married individuals.
Divorced, separated or widowed individuals expect to need more income in retirement than their married counterparts, with €45,381 being the average income which this group expect to need at retirement, compared to €42,171 for married individuals.
Those with children (€39,272) expect to need more than people who don't have children (€43,078), and those living in urban areas (€42,852) believe they'll need more than people in rural areas (€36,316).
“It’s clear from our survey that some people ‘highball’ the amount of income they’re likely to need in retirement and that others ‘lowball’ it," said Reilly.
"There can be many things shaping people’s expectations around the income they will need in retirement – such as their standard of living and income during their working life, their age, their marital status, and even the cost of living in a rural area versus an urban area.
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| Irish adults expect to require an average of €40,860 per year in retirement. |
Regardless of what is influencing one’s expectations of the amount of money they’ll need in retirement, these expectations must be reasonable and realistic.
"It’s crucial that people have a realistic understanding of their financial needs and the time available to build sufficient savings to cover what they’ll need in retirement. Otherwise, they could be in for a significant financial shock when they retire and could even struggle to make ends meet."
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Reference: https://businessplus.ie/news/e40860-retirement-income/
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