So you’re in your 40s, the decade when you are likely to pass from the first to the second half of your working life.
Retirement is still a long way away - but you’ve earned for long enough to appreciate the peace of mind that getting on top of your pension offers - even if you haven't necessarily found the time to sit down and find the plan that works best for you.
As the generation that has worked through Ireland’s boom and crash - you know that life can be unpredictable, and that it’s not pleasant to be in a situation where you feel like your personal finances are out of your control.
Investing in your retirement offers both assurance and highly attractive tax benefits.
It has been speculated that the Government will introduce USC cuts as part of today’s Budget - analysts estimate that this will cost them €750m - but at the end of the month most earners will only take home an extra €13 to €18 per paycheque.
At the same time - households around Ireland are missing out on hundreds of euros in potential tax benefits by not being on top of their pensions.
Take for example someone in their 40s who is earning €48,000 per year. They can get tax breaks on saving up to 25% of their monthly income.
So, in this case - if they aim to hit the 25% threshold - that means putting away €1,000 per month.
This might seem like a lot - and you already struggle to control and keep track of your monthly outgoings - but this saving gets income tax relief of 40%, meaning that only €600 is taken out of your monthly income to save €1,000.
And unlike other outgoings - this isn't a sunk cost - it's not even a cost at all. You are saving this money to fund your life after your working days are done.
More and more people are intending to rely on the State pension when they stop working - although in studies the same people also say that they do not feel that the current state pension would be able to fund the retirement that they want. The single State Pension (Contributory) is a grand total of €11,975 a year at the moment.
These payments are drawn from the Government’s current tax income in any given year - and Ireland’s population trends mean that then today’s 40 somethings get to retirement age, because we have an aging population, there will be more people getting these payments - and less tax payers putting money into the kitty, meaning that the State is facing a pension time-bomb.
To make matters more complicated - most people in their 40s now will retire at 65 - but they will not be able to claim the State pension until they are 68 - meaning that they face a scenario where they will have a gap of three years to cover by themselves if they do not have a private pension.
Recent research carried out by Irish Life found that almost one third of people admitted that they don’t really understand pensions - this is part of the problem.
Getting started doesn't have to be a scary process - you are only a few clicks, or taps away from Irish Life’s easy-to-use pension calculator on any device. We have found this to be a good first step in mapping-out a pension plan.
Once you've got a feel for the numbers you can sit down with a financial advisor or broker and decide what type of plan will work best for you.
Check out the Irish Life easy-to-use pension calculator here.