It’s Never too Soon to Start Your Pension

by | Sep 23, 2021 | pensions

Pensions are often overlooked and put off until later in life. Many people in their 20s and 30s put their pension on the long finger, as it may not be a priority. However, starting early is the best thing you can do for your pension and it doesn’t cost as much as you might think. Here are a few reasons why you should consider starting a pension earlier in life.


People Underestimate the Amount Needed for Retirement

A Zurich survey showed that people in Ireland wildly underestimate the total amount needed for a basic retirement income of just €200 per week. This is less than the current state pension. Around 33% said €200,000, 27% said €100,000, and 14% thought €50,000 would be enough.

In reality, you would actually need around €300,000. The issue here is that many people may not be aware of what is needed until later in their lives, and at this stage, they have missed out on years of opportunity for growth. However, while it is much better to start early, it is never too late to take control of your pension and there are ways to boost your pension fund later in life.


Tax Relief

Tax relief is the greatest benefit of saving into a pension. If you’re paying tax at 20%, then you’re entitled to 20% back on pension contributions. If you’re paying tax on your salary at the highest rate, then you’re entitled to get 40% back on any pension contribution that you make. So it doesn’t cost as much as you may have thought to save for retirement.

Monthly Pension Contribution Sample

Keep in mind that your employer may offer a pension scheme and may be willing to match your pension contributions, so make sure to avail of this if it is an option.


What Starting Early Can Do For Your Pension

Over a 40 year period, a 25-year-old could generate a 51% greater return than a person starting 10 years later. Over the same 40- year period, that 25-year-old could generate a 157% greater return than the person who waits until they are 45. How much you contribute and what tax bracket you fall under influences your potential pension growth.

So a €120 contribution a month from you, along with the €80 from the taxman could grow to over €155,705 at age 65 for a 25-year-old. A pension pot of €157,705 is still not ideal by any means, but typically the closer you get to retirement, the higher the contributions you should make which would accelerate the growth.

Also, if you start a pension in your 20s or 30s, you can invest at a higher risk which could give you greater potential to accumulate growth. You can start and stop your pension contributions as you please, so if you start one now you are not locked in for life.


For more information, book a complimentary chat with a Pension Advisor or call us on 025-30588. We can help you take control of your pension. The earlier you start, the brighter your future.


Oaktree Financial Services Ltd is regulated by the Central Bank of Ireland.

All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified financial adviser before entering any financial contract. Oaktree Financial Services Ltd will not be held responsible for any actions taken as a result of reading these blog posts.

Subscribe to learn more about planning your financial future.

Subscribe to learn more about planning your financial future.

You have successfully subscribed.