27 January 2026
By Roger Kennedy
roger@TheCork.ie

Finance News

“I’ll start my pension next year when I’m earning more.” This seemingly harmless decision costs Irish workers hundreds of thousands of euros in lost retirement savings. Understanding the mathematical reality of pension delays might finally motivate action. This article reveals the stark financial consequences of postponing pension contributions and why starting today-regardless of amount-dramatically outperforms waiting for the “perfect” time.

1. The Pension Procrastination Epidemic

Pension procrastination affects the majority of Irish workers under 40, with devastating long-term consequences that become apparent only when it’s too late to remedy.

1.1 Why Irish Workers Delay Pensions

Common reasons include prioritising immediate expenses such as rent, socialising, and holidays over distant retirement needs. Many believe they have “plenty of time” to start saving later. Others feel overwhelmed by pension options. Some delay whilst researching the best pension plans Ireland provides, paradoxically losing thousands through inaction whilst seeking the “optimal” choice.

1.2 “I’ll Start Next Year” Mentality

The “I’ll start next year” mindset proves incredibly destructive. A single year’s delay at age 25 costs approximately €20,000-30,000 in final retirement fund value. Five years’ delay costs €100,000+. Ten years costs nearly €200,000. These represent real money you won’t have during retirement.

1.3 The Compounding Cost of Delay

Pension delay costs aren’t linear-they’re exponential. Delaying one year doesn’t just cost one year’s contributions; it costs decades of compound growth on those contributions. Early contributions prove worth multiples of later contributions, regardless of which of the best pension plans Ireland offers you eventually choose.

2. Understanding Compound Growth

Compound growth represents the most powerful wealth-building force available to ordinary workers, yet most Irish millennials drastically underestimate its impact.

2.1 How Investment Returns Multiply

Compound growth means earning returns on your contributions and on previous years’ returns. Contributing €100 monthly at 6% annual growth: after 40 years, you’ve contributed €48,000 but accumulated approximately €199,000. The gap between contributions and fund value widens exponentially over time.

2.2 The Rule of 72

The Rule of 72 provides quick estimates of investment doubling time: divide 72 by the expected annual return percentage. At 6% returns, investments double every 12 years. Money invested at age 25 doubles by 37, again by 49, again by 61-three doublings. Starting at 35 allows just two doublings.

2.3 Time vs Money: Which Matters More?

Time matters significantly more than contribution amount. Someone contributing €100 monthly from age 25 accumulates more than someone contributing €200 monthly from age 40, despite contributing the same total amount. Starting immediately with modest contributions beats waiting to contribute larger amounts later.

3. Case Study: Starting at 25 vs 35 vs 45

Real-world scenarios demonstrate the devastating mathematical consequences of delaying pension contributions across different starting ages.

3.1 Identical Contributions, Different Outcomes

Consider three Irish workers, each contributing €200 monthly until age 65 (assuming 6% annual growth):

• Starting at 25: 40 years (€96,000 total) → €398,000 retirement fund
• Starting at 35: 30 years (€72,000 total) → €201,000 retirement fund
• Starting at 45: 20 years (€48,000 total) → €92,000 retirement fund

The 25-year-old accumulates nearly double the 35-year-old despite contributing just €24,000 more.

3.2 The 10-Year Delay Penalty

Delaying from 25 to 35 costs €197,000 in final retirement value-nearly triple the additional contributions made. Even selecting from the best pension plans Ireland offers cannot compensate for lost time-no pension product can retroactively create 40 years of growth.

3.3 Real Numbers for Irish Workers

For context, €398,000 at retirement provides approximately €15,920 annual income using 4% withdrawal rate. The €201,000 fund provides just €8,040 annually-half the income, despite total contributions differing by only €24,000. This dramatic lifestyle difference stems entirely from the 10-year delay.

4. The Tax Relief You’re Losing

Beyond compound growth, pension delays forfeit substantial tax relief-immediate guaranteed returns that amplify long-term losses.

Logo from file: The Irish Tax Authority is the Revenue Commissioners, commonly known as Revenue

4.1 Immediate 40-48% Return on Investment

Irish pension contributions receive tax relief at your marginal rate plus USC savings. A 40% taxpayer contributing €100 receives €40 income tax relief plus approximately €8 USC relief, the net cost is just €52 for €100 contribution. This represents an immediate 92% return before any investment growth occurs.

4.2 Calculating Annual Tax Relief Lost

Contributing €200 monthly (€2,400 annually) at 40% tax rate generates €960 annual tax relief plus approximately €192 USC savings-€1,152 total annual benefit. Delaying ten years forfeits €11,520 in tax relief alone, before considering lost compound growth. This “free money” cannot be recovered later.

4.3 Compound Effect of Lost Tax Relief

Lost tax relief compounds just like lost contributions. The €1,152 annual tax benefit foregone from ages 25-35, invested at 6% growth, would be worth approximately €87,000 by retirement. Pension delays create cascading losses-lost contributions, lost growth, lost tax relief, and lost growth on tax relief.

5. State Pension Reality Check

Many Irish workers assume that the state pension will provide adequate retirement income, justifying pension contribution delays through unrealistic expectations.

5.1 Maximum State Pension: €13,172 Annually

Ireland’s maximum State Pension (Contributory) currently provides approximately €14,420 annually. However, qualifying requires 40 years of full contributions. This amount barely covers basic living expenses, requiring supplementation from personal pensions for a comfortable retirement.

5.2 Projected Future State Pension Changes

Irish state pension faces sustainability challenges due to an aging population. Workers retiring in 30-40 years may face reduced benefits, increased qualifying ages (already rising to 68), or means-testing. Relying primarily on the state pension represents a significant risk.

5.3 Why the State Pension Won’t Be Enough

A state pension replaces approximately 34% of average earnings-insufficient for maintaining pre-retirement living standards. Financial planners recommend targeting 50-70% income replacement, requiring substantial personal pension savings through compound growth.

6. Breaking Down Psychological Barriers

Psychological obstacles prevent pension contributions more often than genuine financial constraints, requiring reframing how we think about affordability.

6.1 “I Can’t Afford It” Reality Check

After tax relief, €200 monthly pension contribution costs approximately €104 net monthly for 40% taxpayers-less than streaming services, coffee purchases, or one night out monthly. The question isn’t affordability but priority.

6.2 Small Contributions Add Up

Contributing just €50 monthly from age 25 accumulates approximately €99,500 by age 65. After tax relief, this costs just €26 net monthly-less than €1 daily. Waiting until you can “afford” larger amounts means forfeiting decades of irreplaceable compound growth.

6.3 Starting with €50-100 Monthly

Begin wherever your budget allows-€50, €75, or €100 monthly. Starting trumps waiting for “optimal” contribution amounts. You can increase contributions as income rises, but you cannot recover lost time.

7. The Catch-Up Myth

Many workers believe they can “catch up” on pensions later through larger contributions, but mathematical reality proves this largely impossible.

7.1 Can You Really Catch Up Later?

A 35-year-old needs to contribute €400 monthly to match the retirement fund of a 25-year-old contributing €200 monthly-double the amount for an identical outcome. A 45-year-old needs €900 monthly-quadruple the amount. Most workers cannot afford these catch-up contributions.

7.2 Required Contributions to Match Early Start

Achieving €400,000 retirement fund starting at age 45 requires €833 monthly contributions-likely unaffordable. That same €400,000 requires just €200 monthly starting at age 25. The 45-year-old contributes €200,000 total, whilst the 25-year-old contributes €96,000-yet both achieve identical outcomes.

7.3 Why Catch-Up Often Fails

Catch-up strategies typically fail because life doesn’t become less expensive with age. Workers over 40 face mortgage payments, children’s education costs, and elderly parent care that prevent dedicating large amounts to pension catch-up.

8. Taking Action Today

Understanding pension delay costs means nothing without action-implementing even modest contributions immediately creates dramatically better outcomes than extended planning.

8.1 Immediate Steps to Start Contributing

Check if your employer offers pension schemes with matching contributions, research PRSAs if self-employed, calculate affordable monthly contributions after tax relief, and set up automatic transfers. Starting with any reputable provider beats indefinite delay.

8.2 Employer Pension Schemes

If your employer matches up to 5% of salary, not contributing that 5% forfeits thousands annually in free money plus decades of compound growth. Maximising employer matching should be your first pension priority.

8.3 PRSAs for Self-Employed and Flexible Workers

Self-employed workers should establish Personal Retirement Savings Accounts (PRSAs). PRSAs offer flexibility, portability, and access to the same tax relief as employer schemes. Even modest PRSA contributions from age 25 build substantial retirement funds.

Looking at the blog content and the Financial Planner website, here’s a branded closing section that would work well:

How Financial Planner Can Help You Start Today

County Kildare based Financial Planner, have over 25 years helping Irish workers avoid exactly the costly delays outlined above. Founded by Brendan and Trish Kelly, their team “understands that pension planning can feel overwhelming—which is precisely why so many people keep putting it off. Whether you’re 25 and just starting your career, or 45 and worried you’ve left it too late, we can help you build a clear, realistic pension strategy that fits your current budget and future goals.”

What FinancialPlanner.ie offers:

• A full review of any existing pensions you may have scattered across previous employers
• Honest guidance on contribution levels that work for your circumstances (not what sounds impressive on paper)
• Help consolidating multiple pension pots into a single, manageable plan
• Ongoing support as your income and priorities change over time

“We serve clients across Ireland, with particular expertise in County Kildare, County Meath, and County Dublin. Our advice is always independent, jargon-free, and focused on your best interests—not on selling you the most expensive product. Ready to find out what your delay might be costing you? Book a free initial consultation with our team to get a clear picture of where you stand and what’s actually achievable.”

Contact Financial Planner:

• Phone: (+353) 01 627 9495
• Email: info@financialplanner.ie
• Location: No.3, Office Block, The Mill, Celbridge, Co. Kildare, W23 ED88

Financial Planner Technology Limited t/a Financial Planner is regulated by the Central Bank of Ireland.

Stop losing thousands to pension delays. Calculate what your delay is costing you with our free pension projection tool, or book a complimentary consultation to create your personalised pension strategy.