A combination of poorly performing pension schemes, higher living standards, increased family commitments and a move away from traditional concepts of saving for the rainy day means that few of us will be debt-free at retirement age.

Four times the debt
According to recent research published on Cardi.ie (the Centre for Aging Research and Development in Ireland), one in three over-55s in the UK will still be paying a mortgage when they’re over 65. And it’s a similar picture here for many over-50s who re-mortgaged on the strength of strong home equity during the boom.

In addition, many older people will carry consumer and credit card debts into retirement along with mortgage repayments.

A study by Barclays revealed that one in four people approaching State retirement age have outstanding consumer credit commitments, owing four times as much as their counterparts did a decade ago. According to Irish Life, nearly half of all women of working age having no private pension fund whatsoever.

It seems that retirement is something many of us leave to chance or put on the long finger until it’s too late.

Plan ahead
“The best way people can ensure they provide for future years is by saving for their retirement and starting as soon as they can, as few could afford their current lifestyle on the State pension of €230.30,” says Sharon McDonnell of Bank of Ireland.

Age 30 or younger is the ideal age to start a private pension but it’s never too late to start and there are attractive tax advantages. “Investors can claim full tax relief at their marginal rate (including PRSI and health levies) on the contributions put into a pension plan, ie for every €100 saved, it is actually only costing €51,” she says (assuming the investor pays the higher tax rate of 41 per cent, with 4 per cent PRSI and 4 per cent health levy).

What your money has to do
Financial planners claim there are four purposes for every euro you have, which include lifestyle expenses, paying off debt, saving for the future and taxes.

When considering risks to your retirement cash flow, take account of longevity, asset allocation (investing too conservatively for a retirement that might be longer than expected), excess withdrawal owing to inflation and healthcare costs.

Top tips for a debt-free retirement

• Assess your current debt and calculate how much you will carry into retirement
• Do a health check of your finances and assess what expenses can be reduced
• Calculate what sum you will need monthly at retirement to live comfortably, including home repairs, health costs, holidays etc
• Check out different retirement savings products from all the banks
• Consider renting a room in your home and saving any earnings
• Consider a life assurance policy
• Pay off debts – experts claim this is one of the best ways of saving