How to improve your pension in your 40s

Absolutely – it’s never too late to start a pension.

Retirement might feel a while away, but with decades of pension contributions ahead of you, you have time to build up a retirement fund. Chances are you’re earning more now than you were in your 20s or 30s, so making larger pension contributions could be more affordable.

It makes sense to contribute more, too, because you may be eligible for significant income tax relief. You can claim income tax relief on pension contributions up to 25% of your income (capped at €28,750 in annual contributions). Income tax relief is not guaranteed; to be eligible, your income must be taxable under either Schedule E or Schedule D (case I or II).

If your income is taxable under Schedule E or D (case I or II) then you are eligible for income tax relief on up to 25% of your income. If you earn over €115,000 then this tax relief is capped at contributions of up to €28,750 per year.

Starting or restarting a pension in your 40s is a great way to try to build a more financially secure retirement. It’s never too late to begin, and with decades ahead of you there’s plenty of time for your investments to grow.

Note that, as with any investment product, the value of your pension investments could go down as well as up and you could get back less than you put in.

To start or restart a pension in your 40s, you should:

Assess your finances

Take stock of your current finances. Do you have a mortgage? Have you any other outstanding debts? Does your income exceed your outgoings? This will help you decide how much you can afford to contribute to a pension.

Remember, you may be eligible to claim income tax relief on contributions up to 25% of your income (up to a total of €28,750 in contributions a year). 

Set retirement goals

Do you want to retire early? How much money will you need in retirement? What kind of lifestyle do you want to lead when you’re retired? Will you have any financial commitments after you retire?

Figure out your contribution

The more you contribute now, the more likely you will have a more financially secure retirement. However, starting early is the main thing – even small contributions can add up and compound over time into a much larger retirement fund.

Calculate your pension here.

Seek professional advice

Consider talking to a financial advisor or broker who can provide personalised guidance based on your financial circumstances and retirement goals.