A healthy, happy retirement is a well-deserved reward after years of working hard.

But how much money should you aim to save for your golden years?

What is a reasonable amount of money to retire with?

Retirement money management might look a little different than what you’re currently used to. As you pay off your mortgage and your kids grow up, your lifestyle changes along with your cost of living.

To save properly for retirement, you should estimate how much you may need to spend, and what your lifestyle choices may be. Fill out the Monthly Budgeting Sheet which can help you keep track of your finances and roughly estimate the average cost of retirement per month.

Although Irish Life Financial Services does not provide budgeting services, we can help you with your protection, pension savings and investment needs. Read on for more practical tips on how to set up good money management practices for retirement

Your current cost of living

First, take a look at how much you’re spending each month right now, as well as how much you’re earning. These are concrete numbers that will give you a baseline for your finances in retirement.

Retirement cost of living comparison

Now, consider what costs will change as you age. In fact, they’ll even change throughout your retirement. You may spend more on travel and eating out during one period and much less during another. Certain costs like your mortgage payments and childcare costs may go down, while other costs like your medical expenses, long-term care, or health insurance may go up.

Factor in the fun stuff

Whether you fancy learning a new instrument or vacationing in a luxurious resort, everyone has a retirement bucket list. Consider allowing for a monthly class, trip, or hobby that you’re looking forward to after years of hard work.

Where can I save money for retirement?

Now that you have an estimate of how much you should aim to save it’s time to consider where you should save. In addition to a savings account and assets like property, bonds, etc that you may have, a pension can be a great way to save money during your working life for 3 reasons:

1. It’s tax efficient
2. Depending on your company pension scheme, your employer might also contribute
3. Because it’s a form of investment, your money has the potential to grow (just as it has the potential to decline)

The current state pension for Irish citizens is approximately €13,000 per year, so a personal pension can be a key strategic move in giving yourself a better quality of life in your retired years. Keep in mind that not everyone is entitled to the maximum state pension. Link in with social welfare or visit Citizens Information to get a sense of what you’ll be entitled to sooner rather than later.

The golden rule of saving into a pension is to start now! It’s never too late as every little helps. Check how much you currently have in your pension pot and compare it with your estimated monthly cost of retirement. If your pension doesn’t currently meet your retirement goals, take a look at what “wants” in your spending you can tweak.

Or, better yet, talk to an expert financial advisor about whether you’re financially healthy and what steps you can take to reach your goals.