Older people face losing €1,532 in spending power by end of year

The rapidly rising cost of living is causing financial stress among the older community, some of whom are turning off their heating because it is so expensive.

Older people are facing a cost of living crisis as rising inflation takes its toll on pensions and savings.

By the end of 2023, older persons could lose 15% to 20% of their spending power putting them at risk of poverty.

According to Age Action, Ireland’s leading advocacy agency on older persons and ageing, the average older person will lose €1,532 in spending power by the end of this year. The average older couple will lose €3,364.

The charity is calling on the Government to raise the State pension by a minimum of €23 from Budget day to protect older people as they head into the winter.

The rapidly rising cost of living is causing financial stress among the older community, some of whom are turning off their heating because it is so expensive.

While the nominal value of €1,000 remains the same, it will only buy €900 worth of home heating oil or groceries compared to one year ago, and potentially as little as €800 worth by the end of 2023.

"Most older persons have a low level of cash savings and, if they have a private or occupational pension, it is modest and not linked to inflation," said Dr Nat O'Connor, a policy specialist with Age Action.

"With the spending power of both of these being cut, the State Pension is more important than ever as the bedrock of income in older age."

Age Action estimates that by the end of 2022, older persons are likely to experience inflation at 9.8%.

Over the course of this year, the charity says the spending power of the full-rate State pension will go down by €589 for one person and €1,118 for a couple.

"Raising all social welfare income by at least €20 would cost less than €1.5 billion at a time when inflation has brought in several billion of extra tax revenue," said Dr O'Connor.

"Indexing social protection incomes so they rise in line with inflation is done automatically in the UK and across Europe.

"Ireland should do the same, to preserve some part of people’s living standards and to keep spending in local shops and services.” 

He said that economic commentators have been too slow to realise how bad the winter will be for older people and called for action to be taken in next month's budget.