How to start a retirement fund in your 20s

In your 20s, you get your first taste of true financial freedom with significantly greater financial resources and responsibilities.  In your 20s your retirement may seem like a long way away, but starting a pension now gives your pension contributions more time to grow. Even small pension contributions can make a big difference to your retirement income.

Here you may benefit from:

• Free money from the government in the form of income tax relief. 
• Free money from your employer in terms of employer pension contributions.
• Significant investment growth potential. The below table shows a projection of what a €100, €300, and €500 monthly could amount to in retirement if invested in Aviva’s Default Pension Investment Strategy – My Future ARF at aged 25 (assuming 5.10% annual growth reducing to 2.43% in the 15 years before retirement)^1,2:

Saving for retirement in your 20s – projected investment growth in default strategy^1,2

Over 40 years, someone who starts saving €300 a month at aged 25 could have almost €120,000 more in their pension fund than someone who starts at age 35. And, compared to someone who starts at age 45, it’s almost €200,000  more.  

Speak with your employer to ensure you understand how your company’s pension works and how can maximise the tax relief and employer pensions contributions on offer. 

Your Financial Broker – the best place to get your pension started and stay in shape

In a recent Brokers Ireland Survey, those who sought pensions advice tended to have much bigger pension pots compared to those that didn’t³. So, if you're thinking about your pension, it's definitely worth considering speaking to a Financial Broker to make sure you're on the right track.  They’ll help you create a personalised pension plan to help you build a secure retirement and safeguard your hard-earned money.

1. This is based on an investment in Aviva’s Personal Pension Plan Option A. It assumes there is a 0.9% Annual Management Charge, 4% renewal commission, and €4.50 monthly policy fee. 
2. THESE ILLUSTRATIONS ASSUME INFLATION OF 3.00% PER ANNUM AND AN INVESTMENT RETURN. BEFORE RETIREMENT OF 5.10% PER ANNUM REDUCING IN THE 15 YEARS TO RETIREMENT IN LINE WITH LIFESTYLING OPTION 1 TO 2.43% PER ANNUM. THESE ARE LONG TERM ASSUMPTIONS. THEY ARE FOR ILLUSTRATION PURPOSES ONLY AND ARE NOT GUARANTEED. ACTUAL INVESTMENT GROWTH WILL DEPEND ON THE PERFORMANCE OF THE UNDERLYING INVESTMENTS AND MAY BE MORE OR LESS THAN ILLUSTRATED.
3. Source: Brokers Ireland Survey July 2023 ‘The value of advice’. The average pension pot of those who sought pensions advice from a financial broker was €130,525 compared to €84,230 for those who didn’t seek advice. 

This article is not intended to give advice or a personal recommendation. If you'd like a personalised recommendation based on your circumstances, you should speak with a financial broker.  You can find a financial broker on brokersireland.ie.

Remember that tax laws can change over time, so it is important to check revenue.ie for the latest information.