“Analysis shows that the average person in Ireland needs to save an additional €9,100 per annum to live adequately in retirement and the ‘Total European Pensions Gap’ stands at €1.9 trillion per annum.”
That’s according to a release from Aviva where;
“Current analysis shows that Ireland’s workforce will face a seriously reduced standard of living on retirement, with a current average savings gap per person of €9,100 per annum.
“As our population ages, we are facing a future retirement dilemma – will we need to work longer, save significantly more now and/or accept a lower standard of retirement living?
Ireland’s annual Pensions Savings Gap, the difference between what is currently being saved and expectations for retirement, stands at €20.2 billion, the equivalent of an average €9,100 per person per annum of working age. This is among the findings of the most comprehensive analysis of Europe’s retirement landscape to date, by leading European insurer, Aviva. The gap across Europe as a whole stands at €1.9 trillion per annum.
INDIVIDUALLY
At an individual level, only the UK and Germany have higher average savings gaps, with a deficit of €12,300 per person in the UK and €11,600 in Germany respectively. The size of the gap varies for each individual depending on their age and their current pension provision, with those in Ireland who are 20 years old facing an average gap of €1,700 per annum and those who are 60 years old facing a gap of €21,100 per annum. This clearly shows that starting to save at a younger age establishes a stronger and more manageable footing for retirement income.
To put the €9,100 in context for individuals, the average pension savings gap in Ireland is the equivalent of 34% when measured in terms of disposable income. Â
ACTION PLAN
Aviva’s research assessed the gap between the savings that people retiring will need in order to maintain their standard of living in retirement and the actual pension provision they will have. It indicates that without action today to save more for retirement, many EU citizens will be forced to accept a combination of:
Working during retirement. Already, some countries across Europe are expecting to see the number of people working beyond retirement age double in the next 10 years.
Retiring later. Increasing the retirement age would help reduce the pensions gap but it will not solve the problem on its own.
Accepting a significantly reduced standard of living.
INCREASE
In addition to this, by 2051, 50% of the current Irish population will reach retirement age, a threefold increase in the number of people over 65 today. This means that the number of people working to fund those who are in retirement will drop from 6:1 to just 2:1, putting another huge strain on the economy and on people starting their working lives today.
