People who are not married or cohabiting in the run-up to retirement are more likely to find they have an inadequate income once they stop working, according to new research.
The Economic and Social Research Institute (ESRI) report shows that while few of those approaching the State pension age are at risk of falling below the at-risk-of-poverty line, there is an increased likelihood of that occurring for those living alone.
The study is based on data collected for the Irish Longitudinal Study of Ageing (TILDA) and looked at those currently aged 60-65 as to whether they will have enough income for retirement.
It estimated that 9% of those approaching the State pension age are likely to fall below the official at-risk-of-poverty line in retirement, compared with 14% for the population as a whole in 2018. Non-pension wealth, such as second homes or cash savings are seen as playing an important role in preparing for retirement.
The ESRI also found that those with the lowest education levels are also more at risk, particularly when looking at replacement rate measures which relate income in retirement to the amount of pre-retirement earnings or income they replace.
It also detailed the increased likelihood that those living alone in the lead-in to retirement may also have an income gap.
Dr Anne Nolan, ESRI Associate Research Professor and a co-author of the report, said: “Our results suggest that those living alone are at greater risk of having inadequate income in retirement than those who are married or cohabiting. Given these findings, the Living Alone Increase — an additional payment made to recipients of the state pension and certain other social welfare payments — could be a particularly well-targeted instrument for addressing concerns about income adequacy in retirement among this group.”
ESRI economist and co-author Dr Barra Roantree, said: “Our research shows that those at risk of poverty in retirement may be overlooked by income adequacy targets that are based on previous earnings, which have been to the forefront of government policy in recent decades. This suggests that policymakers should take a broader range of measures into account when considering who is at risk of having inadequate income in retirement.”