Planning for retirement – it’s never too early and (almost) never too late!

December 2021



While the general advice to everyone is to begin contributing to a pension plan as early as possible, the reality is that very many of us seem to put it off until a point where we believe it may be too late to do anything about it.


As well as plain old inertia, there are several plausible reasons for such delays – cashflow constraints due to meeting your mortgage payments, costs associated with raising and educating your children and the hustle and bustle of life in general means setting aside resources to commit to your future retirement can often fall down the list of priorities. However, it’s almost never too late to do something about it!


Perhaps part of the reason why people believe the opportunity to fund a pension has passed them by is the manner in which a typical pension calculator works. Take a 45 year old earning €100,000 a year with no pension assets and who is targeting a pension of €50,000 per year at the age of 65. A standard pension projection calculator will dictate that they need to contribute an eye-watering 70% plus of their salary to achieve their target. The contributions as a percentage of salary only get worse if they put it off for another year (or three!). By the time they reach 50, starting a pension with the aim of reaching the same target would actually cost them more than they earn. It’s no wonder some of us are relying on a windfall from the Lotto to fund our retirement.


However, if we want to encourage those who feel it may be too late, we need to consider how to tilt the maths in our favour and seek to reduce the monthly cashflow burden of our prospective retiree. First things first, the State Pension hasn’t been taken into account in the above calculations. When it is, the required contribution level falls to 53.4% for our hypothetical 45 year old. Still significant but somewhat less daunting.


The projected retirement age can also be tinkered with to further reduce monthly contribution levels. While there is some political debate around this currently, it’s probably safe to say that a 45 year old today will not be eligible for a State pension until they are at least 68. If they delay their projected retirement from work until that age, the required contribution level drops to 41.4%. If they pushed on a little further and decided to wait until they are 70, the contribution level drops to 35.2%. That may well be affordable when tax relief is taken into consideration. It all depends on the circumstances of the individual concerned.


So far we have only considered the traditional sources of “pension” income in retirement and how these can be funded. But that is to ignore other so-called “pillars” on which many of us lay our retirement plans. The very nature of retirement is constantly undergoing reappraisal. Not only are people thinking about retiring later, they are considering not retiring at all – in the medium term at least. For business owners this means winding down over a period while handing over some of their responsibilities to family members or other executives. For others it means taking part-time options, in their current workplace or perhaps moving into the consultancy area or seeking opportunities elsewhere. As some level of employment income is maintained, the amount required to be earned from a pension falls, at least in the early retirement years and so the cash cost today of providing that future income can also be reduced a little more.


Another element of a potential retirement plan which people often fail to take into consideration is their existing savings and other assets outside of their pension pot. With a combination of pension income and perhaps some employment income along with the State contribution, the fourth ‘pillar’ of a successful retirement plan is represented by these non-pension assets. For example, a residential investment property which is currently not generating a net income because the rent is only enough to meet the mortgage repayments will represent a very different prospect in 20 or so years’ time. That property could potentially be generating an income of more than €15,000 or €20,000 a year by then. Again, that would have a significant impact on retirement income targets and required monthly contribution levels.


Taking all these factors into account, it is clear that it really is never too late to start thinking about supplemental income in retirement. Even if only in a small way, the traditional pension can still do a job and make at least some contribution to the overall cost of an individual’s desired lifestyle in retirement. However, with such a variety of options to contribute to meeting the cost of your lifestyle in retirement, it might be difficult to ‘bring it all together’ and understand what the sum of all the available parts represent. Understanding how each of the constituent parts fit together will help enormously in the delivery of your goal. Unio's comprehensive WealthPlan™ service is designed to help our clients to proactively navigate their financial future and ensure their retirement plan is fit for purpose, whatever its individual elements. Understanding what you have now, what that might look like in the future, and what levers are available to be pulled if you need a little more, is at least half the battle when it comes to retirement planning.


If you would like to explore how we can help you to structure your retirement plan and save for your future, please contact me at or speak to your Unio consultant.

Stephen Barry

Senior Financial Planning Consultant

Stephen is a chartered certified accountant (FCCA) and Certified Financial Planner™. He joined Invesco following its acquisition of City Life in 2019, having been a director of City Life since 2012. Prior to his time with City Life, Stephen was an associate director with Davy Corporate Finance. Stephen has a wealth of experience in advising self-employed professionals, company owners and pension scheme members in relation to their both their retirement and investment needs as well as their general financial planning requirements.