Pensions

Will your pension be enough? Working out your retirement gap

Last updated 16 October 2026

Start from the income you want and take off the State Pension (up to €299.30 a week in 2026). Then see whether your own pension covers the rest to age 90.

A pension gap is the difference between the income you want in retirement and what your pensions will pay. Working it out takes four figures: your target, your State Pension, your own pension savings, and how long the money has to last.

1. Your target, in today's money

Start from what you spend now and take off costs that will end, such as a mortgage or childcare. Keep everything in today's money, so inflation doesn't distort the comparison.

2. The State Pension

The full State Pension (Contributory) is €299.30 a week in 2026, €15,563.60 a year, from 66. Budget 2027 raises it to €309.30 a week from January 2027. The full rate needs 2,080 PRSI contributions, about 40 years; fewer gives a proportion of it.

3. Your own pension

Your fund at retirement depends on what is in it now, what goes in, growth and charges. At retirement you can usually take 25% as a lump sum, the first €200,000 of it tax-free over your lifetime. The rest pays your income, often through an Approved Retirement Fund.

4. How long it has to last

Plan beyond average life expectancy. Running out at 80 is a bigger problem than leaving money at 90.

An example

Someone aged 45 wants €35,000.00 a year before tax from 66. They have €100,000.00 in pensions and €600.00 a month going in, with growth of 5% a year after charges and inflation of 2%.

Income wanted a year	€35,000.00
State Pension	(€15,563.60)
Needed from their own pension each year	€19,436.40
Pension pot at 66 (today's money)	€391,733.30
Tax-free lump sum taken	(€97,933.33)
Left to pay an income	€293,799.97
Your pension runs out at 85
Extra to pay in each month to close the gap	€164.35

Paying more in now is the cheapest way to close a gap. It has longest to grow, and income tax relief at 20% or 40% pays part of it. Working a few years longer, or lowering the target, also helps.

Pension income and withdrawals from an Approved Retirement Fund (ARF) are taxed. But from 65 you get an age tax credit, and income up to €18,000 for a single person is exempt from income tax. The State Pension isn't subject to USC.

Run your own numbers with the pension gap calculator, and check your State Pension with the State Pension forecast.

Work it out

Sources

Citizens Information: State Pension (Contributory): qualifying, Total Contributions Approach, Yearly Average bands 2026 (checked 25/10/2026)
Citizens Information: Social welfare rates announced in Budget 2027 (2026 and 2027 rates side by side) (checked 25/10/2026)
Revenue: Taxation of retirement lump sums (€200,000 tax-free, 20% to €500,000) (checked 25/10/2026)
Revenue: Pensions Manual Chapter 28: imputed distributions from ARFs (4% from 61, 5% from 71, 6% over €2m) (checked 16/10/2026)
Revenue: Exemption limits for people aged 65 or over (€18,000 single, €36,000 married) (checked 25/10/2026)
Citizens Information: Taxation of pensions (occupational pensions: income tax and USC, no PRSI; social welfare pensions: income tax only) (checked 16/10/2026)

General information, not tax advice. HeyPenny is not a tax agent.