Underfunded Retirements in Ireland and Beyond

One of the starkest realities is how little many households have saved when they hit retirement.

In Ireland;

• The Contributory State Pension provides about €15,100 per year (€289.30 per week in 2025) for those with full contributions (Gov.ie).
  
  
• CSO data shows that 56% of workers without private pensions expect to rely primarily on the State Pension in retirement (CSO, Pension Coverage 2024).
  
  
• TILDA research has found that for households aged 65+, the State Pension makes up roughly two-thirds of gross income, and 26% rely entirely on state-funded income (TILDA Report).

Based on US research, the picture isn't much different there;

• Vanguard’s How America Saves finds that the median defined contribution (DC) plan balance for 55–64 year-olds was $95,642 in 2024 (Vanguard, 2024).
  
  
• Professor James Poterba’s research shows that for Americans aged 65+, public pensions (Social Security) account for 85%, 84%, 57%, and 18% of income across the first to fourth income quartiles.

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CCPC Pension Coverage Research Ireland September 2025

The wonderfully-named 'Competition and Consumer Protection Commission' here in Ireland (CCPC) do some hugely positive work in educating, protection and informing us of all-things financial and otherwise. They recently published their findings of very interesting research around Irish peoples' preparation for retirement. They approached it from a financial and pension-coverage perspective....

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• While 60% of Irish adults have some form of pension, a significant 26% remain completely unprepared for retirement
• 11% intend relying on rental income (fallen almost a half from 2 years ago!)
• One-third of pension holders regret not starting their contributions earlier.
• 36% of pension holders are unsure how pensions work
• 66% have never spoken to a financial advisor
• 60% have little to no understanding of how Auto-Enrollment (Jan 2026) will work, and only 27% of those without a pension expect to be enrolled in AE!
• More than half of those with a pension lack confidence in its ability to provide a good standard of living in retirement.
• Pension ownership is lowest among 18 to 24-year-olds (18%)
• Worryingly, 21% of those aged between 45 and 54 report having no retirement arrangements in place

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Full CCPC report available here.

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But why is this a problem, one might ask?

The Real Problem Here??

But why is this a problem, one might ask. Fair enough.

The real problem is not that 40% have no pension, or that there is a lack of awareness around Auto Enrollment, or any other stat.

For me, the problem is that most of us have given little to no thought or planning to funding our financial freedom.

Of course, there are many who are struggling week to week, month to month, and for whom, making ends-meet is the sole focus. That's not an easy place to be.

For many however, there are resources and choices, and gratifications that can be delayed, and planning can be done - they simply don't do it.

And why should they?

Because, they'll need the money.......

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‍The Retirement 'Smile' in Spending Patterns

Much of the research over the years (some of which we've assessed and shared about here previously) states that retirement spending rarely dips by choice.

It often follows a U-shaped curve:

• Higher in the early years (The 'Go Go' years!); travel, leisure, lifestyle (like a young calf let out into a field!)
  
  
• Lower in the middle (The Slo-Go years!); activity slows, health constraints grow.
  
  
• Higher again later (The No-Go years!); healthcare and support costs increase
  
  

CSO data for households aged 65+ shows:

• 40% less on transport than younger households,
  
  
• Over 50% less on recreation and culture, but
  
  
• More on health, and only slightly less on food and housing (CSO, Household Budget Survey 2022–23).
  
  

The message appears clear: discretionary spending falls, but essentials remain stubborn.

But, is that reduction in spending in retirement by choice or enforced?

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Spending Can Increase In Retirement, If We Have it!

“Heterogeneity in spending change at retirement” (Hurd & Rohwedder, 2013)

Hurd & Rohwedder (2013) examined how spending changes when people retire. On average there is only a small drop in total spending at retirement.

But the change isn’t the same for everyone. People with more wealth often increase spending after they retire. For less wealthy households the drop is larger.

Key observations

• Spending declines at retirement are small on average for total spending.
• Upper-half wealth households often see increases in spending after retirement!
• Low-wealth households show larger spending declines.
• Poor health is a big factor in early retirement and larger spending drops.
• Some of the decline is explained by the cessation of work-related expenses (commuting, clothes, etc.) which stops when work stops.
• Another part comes from substitution: people replace market-purchased goods and services with home production or use their own time instead.

Full research here.

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It seems that having more assets/income in retirement will result in us not reducing our spending!

And that reducing spending is enforced as opposed to a choice we want to make, as a general rule.

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‍Spending Habits Today, Retirement Pressures Tomorrow

It appears we’re raising generations for whom money flows easily, and instantly!

• Teen spending shot up 23% in June 2023, driven by entertainment, clothing, and food, all tapped via debit cards (Bank of Ireland Spending Pulse, 2023).
  
  
• In May 2024 alone, Irish consumers spent €8.54 billion on cards, with contactless accounting for more than half (Central Bank of Ireland, 2024).
  
  

If today’s habits are rooted in seamless consumption, shrinking those habits in retirement and during careers won’t feel natural. It’ll feel like deprivation!

Are we losing the ability to delay gratification? That's a big question, but my sense is that we very much are! And I don't feel proud about that.

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How To Encourage People/Employees To Plan For Retirement?

If you are a parent, team leader, manager or business owner, perhaps you can encourage your team to up the ante (I was playing poker recently!) with regards their pension planning?

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• Encourage them to Start Saving Early: Starting pension savings early leads to higher investment growth, resulting in a larger pension pot that could sustain your employee’s standard of living during retirement. So, if they haven’t started saving yet, recommend doing it immediately.

• Help Them Define Their Retirement Goals: Defining retirement goals will allow your employees to make realistic pension-saving decisions. Once they have decided what they want, they can focus on expenses like healthcare and travel.

• Ask Them to Evaluate Their Investment Performance: Remind your employees to regularly review their pension fund’s performance against relevant benchmarks to make informed decisions! Also, ask them to consider if the value of their pension fund aligns with their retirement needs.

• Engage Professional Advisors: Facilitate access to qualified financial advisers to simplify pension fund performance management, funding and planning for your employees. These experts can assist with retirement planning and analyze your investment strategy to ensure your business is effectively supporting employees while staying on the right track.
• Auto Enrollment: Due to kick-off in January 2026, assess whether AE, a PRSA or a group Master Trust may be better for your team and your business.

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Final Word: Building a Retirement Without Myths

Would you rather build a financial future lined with velvet cushions, or one pieced together with spud bags??

According to some of the research above, spending declines aren’t voluntary, they’re the result of dwindling means and necessity.

If we want our retirement to be defined by freedom, not by constraint, we need to look at the real numbers.

We need to stop kidding ourselves.

We need to start planning accordingly.

I hope this helps you act.

Thanks,

Paddy.

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