It’s never too late to start a pension

It’s never too late to start a pension, but the sooner you do, the better it will be. A pension can give you security in retirement, and unless you win the Lotto in the meantime, a pension is the only game in town. 

Starting a pension in your 50s is not difficult to do. The benefits are obvious, such as tax relief on payments and building security for later years, and you can find a plan to suit your income needs. 

When you start a pension, regardless of age, you’re investing in your future, giving yourself extra income, and taking a worry off your shoulders. 

People start a pension in the 50s all the time, so why shouldn’t you do it today?

When is the best time to start a pension?

Today is the best time to start a pension. You’ll never be as young as you are today, and starting a pension now will get the ball rolling in growing that pension pot. Every bit of pension advice you get will tell you to start now, so why not take the good advice and start that pension today? 

“The best time to plant a tree was ten years ago. The next best time is today” is a well-used phrase, but it makes a lot of sense. We are only indulging in self-denial by thinking all will be ok when we retire. 

Every statistic you read will tell you otherwise, and hoping the State pension will get you through is only wishful thinking. 

The best time to start a pension is today. It is not a decision to put off until tomorrow, as we all know tomorrow never comes. A proper pension pot for when you retire needs proper planning, and the best time to begin planning for retirement is today. 

The sooner you start a pension, the sooner you will be to having enough in the pot to retire, and it might surprise you to learn how much you’ll need to retire comfortably in Ireland.

How much do I need to retire comfortably in Ireland?

You need a lot to retire comfortably in Ireland. When you retire, your salary stops while life keeps going – you’ll lose the company car, the annual bonus and plenty of other extras as soon as you finish at the office. 

You will still need to pay bills, keep up with any loan payments, and maybe have a mortgage to finish. It looks like the kids won’t be financially stable until their 40s these days, and you’ll want to spoil the grandkids when they pop over on the weekend. 

Surely, you’ll want to go on those dream holidays now that you have the time? 

Living costs money. You’ll get the State pension in Ireland when you reach retirement age, but that’s only €265.30 per week or €13,800 annually, a big drop if you’re earning the average wage of around €45,000. 

Living in the Ireland of 2023 is not cheap, and costs are only increasing. Average outgoings are about €3,374 per month for a family of four, excluding mortgage or rental payments. 

Even if you make savings here and there, it’s still way above what the State pension will give you. People make up the difference by contributing to a private pension plan. 

As you get older, you can start to add more to your private plan, and there are many benefits, not least a larger pension pot, when you retire.

How much can I add to my pension pot?

It’s a question many people ask, and even more so on turning 50 when thoughts turn to retirement. The last 15 years or so at work can go quickly, everything does as you get older, and before you know it, you’re getting up Monday morning to walk the dog instead of going to the office. 

The good news is that you can add to your pension pot in Ireland. What you thought might be enough when in your 30s may not be now but topping up the pension pot will ease the burden. 

The limits on the maximum amount you can contribute to your pension increase as you get older, helping you to add to the pension pot as you get closer to retirement. 

The maximum pensions fund contributions are:

  • Under 30 years of age – 15% of total salary
  • Between 30 and 39 years of age – 20% of annual salary
  • Between 40 and 49 years of age – 25% of annual salary
  • Between 50 and 59 years of age – 30% of annual salary
  • Over 60 years of age – 40% of annual salary

Pension contributions are tax-free when at or below the maximum limit. 

Many people may not make the maximum contributions when younger, as pensions may not seem as important, but that can change when you reach 50. 

Reviewing your pension contributions and seeing that your pension plan will return enough for you to live comfortably in retirement is vital. 

If you haven’t started a pension or maybe want to start a better private one, you can still do so when in your 50s. There are many reasons to do so, not least is that you’ll have a comfortable retirement.

How much can I add to my pension pot

Five reasons to start a pension late in your working life

It’s never too late to start a pension in your working life, and the benefits will be seen when you eventually retire. We all want to live a long life, and after spending over 40 years at work, we want to do so in good health and have plenty of fun. 

Five reasons to start a pension late in your working life are:

More disposable income to make pension payments

Later in your working life, the chances are that your disposable income will increase. The kids will be through college, the mortgage will be paid, and you could be on a higher salary. 

You can now afford pension contributions and build up a pension pot for when you retire.

Getting tax relief on contributions

The government wants you to contribute to a pension plan, so they will give you tax relief on contributions. If you pay tax at the 20% level, you will get a 20% tax relief on contributions; on 40%, you’ll get a 40% tax relief.

 You’ll be saving money for the future, and the government will give you tax relief as you do it. What’s there to argue about?

A larger tax-free lump sum when you retire

Many people opt for a tax-free lump sum when they retire instead of their guaranteed pension payments. They can invest the lump sum or maybe draw down from it when needed. 

When you start a pension later in life, you can add more to the tax-free pot and build up a larger tax-free lump sum for retirement. 

Everyone is eligible to access up to 25% or €200,000 (whichever comes first) from their personal pension.

Cashing in your pension early is a great incentive for many people starting pensions in Ireland.

Taking the worry out of retirement

It’s difficult not to worry about retirement. Your salary is gone, and many people only have the State pension as a weekly income. Taking the worry out of retirement by starting a pension scheme is an excellent option. 

You can start a pension in your 50s and give yourself a decent income on retirement.

You could retire earlier

You could retire earlier if you start a pension in your 50s or maybe increase the salary deducted contributions to an existing pension plan. You could look at your options and, in discussion with a pension advisor, maybe slip off home before you reach retirement age. 

Who wouldn’t like to retire a bit earlier? Maybe you can if you start a pension today? 

How to maximise your pension when starting at 50

You can maximise your pension when starting at 50 by being smart with contributions. There are savings to be made on tax and other salary deductions, and if you can steer them into your pension, you’ll reap the benefits when you retire. 

Obviously, if you want to get the best possible pension and if only starting when you turn 50, you will need to make the maximum contributions. Depending on your job, you could have another 15 to 18 years of earning a salary to make those contributions. 

By making your maximum tax-deductible pension contribution each year, which only increases as you get older, you can build a nice pot for retirement. A contribution of more than €1200 per month, after claiming the tax relief, for 18 years could give you that €800,000 pot and a comfortable retirement.

It’s never too late to start a pension, and the sooner you start when you turn 50, the better it will be for you when you retire.

The best pension options for over 50’s

You don’t need to look too far for the best pension options for the over 50s. With good advice and a bit of smart thinking, you can maximise your pension, and it need not cost you the moon. 

Most people will have a higher disposable income as they go into their 50s. The large monthly outgoings will begin to drop off, and if you can invest the money in a pension plan, you will reap the benefits in just a few years. 

Some of the best pension options for the over 50s are:

Personal Retirement Savings Account (PRSA)

A personal retirement savings account, a PRSA, is a plan you contribute to that is invested in various schemes and funds. You can vary your contributions, and what you invest is tax-deductible. A well-managed PRSA can give you a high return over time. 

A PRSA suits many people in their 50s as you can invest large amounts into your fund and take it with you if you change jobs, which many people do to earn a higher salary before they retire.

Self-employed pensions

Self-employed pensions are a crucial part of planning for retirement for the self-employed when they reach their 50s. 

Many self-employed people do not plan for the future due to the nature of their work but begin to get worried when they turn 50. 

You can start a self-employed pension when in your 50s. The government will give you tax relief on contributions, and if you can maximise how much you can invest, you will see the benefits when retiring.

Self-employed pensions

Company pension schemes

Company pension schemes are the old-reliable of the pension world. You pay your monthly premiums, and when you retire after 40 years, you have a nice pension.

 Changes in the law mean you can now transfer your pension plan during your working life and not lose the benefits when moving jobs. 

In your 50s, you can increase the contributions into your pension scheme up to a maximum of 40% of your salary as you get older. 

You will also qualify for tax relief as you put the money into your scheme and save even more.

Company pension schemes

Executive pensions scheme

Executive pensions for the over 50s make a lot of sense and can help you build a nice pension pot for your retirement. Many companies offer an Executive Pension plan as an incentive to keep employees and attract talent to the company. 

If you are in your 50s, an executive pension could be just the ticket for a good retirement plan. The company can get tax relief on the contributions they make, as can you from your salary deductions. 

The executive pension can be managed by a team of specialist investors who will maximise returns for those in the scheme.

Executive pensions scheme

How to start a pension

You can start a pension by filling out our free online assessment tool below to speak with a Qualified Financial Advisor. 

It is never too late to start a pension, and our Qualified Financial Advisors will advise you on the best options available today. Anyone from the self-employed to the over 50s and those looking to boost their retirement options should talk to one of our pension advisors. 

Our assessment tool is easy to complete and is the best way to get an idea of your pension needs and how to get started on the best pension for you. 

For the best pension advice and help getting started with a pension, fill out our online assessment tool today.

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