Irish workers expect to need an average annual income of €40,860 in retirement, while almost all (97 per cent) believe the state pension alone will not be enough to live on, according to a survey by Royal London Ireland.

The survey of 900 non-retirees found that men expect to need significantly more income in retirement than women, with men estimating they will require €44,000 a year on average compared with €38,000 for women.

Royal London Ireland said the findings highlight a gap between retirement income expectations and pension saving.

It calculated that an individual earning €61,908 who starts saving at age 30 would need to contribute 22 per cent of their salary, or around €1,135 a month, to achieve an annual retirement income of €40,860 at age 66, assuming they qualify for the full state pension.

Royal London Ireland pension proposition lead, Mark Reilly, said many people underestimate the amount they need to save for retirement and warned that while auto-enrolment should improve pension coverage, it may not provide a sufficient retirement income for many workers.

Reilly pointed to a 2024 KPMG report, Irish Retirement Living Standards, which found that a single person would need a pension income of €33,600 a year, while a couple would need €43,200 for a comfortable retirement.

However, he said whether people achieve their expected retirement income will depend on how they approach pension saving.

“While the overwhelming majority (97 per cent) of people who are yet to retire don’t expect to be able to get by in retirement on €15,000 a year, which is close to the current state pension, a recent report from the Central Statistics Office (CSO) found that around one third of workers don’t have a private pension and mostly expect to rely on the state pension,” he noted.

Reilly also said people’s retirement income expectations often do not match what their pension savings will ultimately deliver.

“Previous research by Royal London Ireland found that three-quarters of people underestimate the amount they would need to fund a modest pension in retirement. People’s lack of awareness of how much it would take to secure a modest pension means many are unlikely to put enough aside in pensions contributions through their working life,” he stated.

The survey also found that 10 per cent of respondents expect to need between €75,000 and €100,000 a year or more in retirement. Retirement income expectations also varied by age, gender, marital status and location.

For example, men are almost twice as likely as women to say they would need an income of €100,000 plus when they retire (9 per cent versus 5 per cent).

Meanwhile, those aged between 25 and 34 believe they will need the most income in retirement, with this age cohort expecting to need an annual income of €48,443 on average when they retire. Expected retirement income generally declined with age.

Those aged between 55 and 64 believe they will need the least amount of money when they retire, with this age cohort believing that €33,701 on average would be enough annual income in retirement. This compares to an average of €38,896 for 45-54 year-olds and €41,103 for 35-44 year-olds.

Single respondents expected to need less income in retirement than married respondents, estimating they would require €37,882 a year on average compared with €42,171 for married individuals.

“Regardless of what is influencing one’s expectations of the amount of money they’ll need in retirement, it’s important that these expectations are reasonable and realistic,” he stated.

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