Many people assume their income after retirement will naturally be taken care of. State Pension provides a basis, and many employees accrue workplace pension benefits. Yet the number of people who build up little or no pension is growing. This includes self‑employed professionals, flexible workers and employees without a pension scheme. For them, a significant drop in disposable income looms once their active career ends. And that raises an important question: what does your lifestyle actually cost?
The State Pension is a basis, not a full income
For someone earning an average salary, the State Pension (AOW) only covers part of what is needed to maintain the same standard of living. Without additional pension savings or private retirement capital, disposable income after reaching State Pension age can fall by 30 to 50 percent. That means less financial room for everyday expenses, hobbies, holidays or supporting children and grandchildren.
Building your own retirement capital creates security
Starting early with building retirement capital provides long‑term financial peace of mind. Thanks to tax incentives, the net cost is lower than the amount you contribute. With pension saving or retirement investment products, contributions are often tax‑deductible. This means you receive tax relief while investing the full gross amount. Your net outlay is therefore lower than the actual contribution.
Example: what 30 years of contributions can deliver
The table below illustrates the potential additional net annual income after retirement, based on 30 years of contributions and an assumed average return of 4 percent. The figures are indicative but provide a clear sense of what long‑term saving can achieve.
| Net monthly contribution | Gross contribution (after tax relief) | Capital after 30 years | Net annual lifelong payout |
| €50 | €75 | €52,000 | €2,400 |
| €100 | €150 | €104,000 | €4,800 |
| €150 | €225 | €156,000 | €7,200 |
| €200 | €300 | €208,000 | €9,600 |
Due to tax relief, contributing €75 gross typically costs around €50 net, depending on your tax band.
The conclusion: time is your greatest advantage
The earlier you begin, the less you need to contribute to achieve the same outcome. Time is the most powerful factor in building retirement capital. By starting now, you avoid a steep drop in disposable income and preserve your financial freedom later in life.
At Your Financials, we help people gain insight into their financial future, develop scenarios and make informed decisions. A conversation overheard in a shop, at the sports field or at a birthday gathering can be the first step towards long‑term financial clarity.