Half of 35- to 54-year-olds have made no plans for retirement provision

ALMOST half of people between the ages of 35 and 54 have not started planning for retirement.

Alarming figures show, however, that if a person starts saving for retirement at 35, they will need to save around 19% of their net income, assuming the current tax relief is retained. This rises to 24% at 40, 31% at 45 and a whopping 43% at 50.

Actuary and head of business development with Acorn Life, Keith Butler, said it pays to start early. “The fact that only half of all adults have planned for retirement doesn’t really surprise us. The age you start your contributions has a huge effect on the overall cost,” he said.

The above numbers are based on a man earning €40,000 a year, retiring at 65 on two thirds of income and include the current state social welfare pension of €11,976 a year.

Director with IFG corporate pensions Fionán O Sullivan said: “I cannot stress enough that pensions are absolutely crucial to ensuring your future financial security. Pensions provide for your future financial security and often that of your spouse and for that reason should be treated with the importance they merit.”

Research from EBS and the National Adult Literacy Agency (NALA) also shows that two-thirds of Irish adults struggle to understand financial terms. Women tend to be more confused by financial terms than men, with 73% of women and 63% of men finding jargon confusing.

However, when it comes to managing finances on a day-to-day basis, women are perceived to be much better at handling money than men. While 16% of those questioned believed men were better at handling finances, 42% feel that it is women who are better with money.

Half of Irish adults create monthly budgets to help them better manage their finances but of those who put a budget together, only 15% tend to follow it strictly. While 57% follow a budget to some extent, 28% do not stick to it at all.