Risk of retirement poverty greater for older people living alone

Older people living alone in the years before they retire are at greater risk of having inadequate income in retirement than those who are married or cohabiting with a partner, according to the latest research from the Economic and Social Research Institute.

The study, titled 'Income Adequacy in Retirement', examines whether those currently aged between 60 and 65 will have sufficient income after they leave the workforce.

The research suggests that those who are living alone are at greater risk of falling below the "at-risk-of-poverty" line than those who are married or cohabiting.

The ESRI notes that help for this group of retirees at higher risk of post-retirement poverty could be targeted effectively via the Living Alone Allowance.

ESRI Associate Research Professor Anne Nolan, who authored the report, said: "Given these findings, the Living Alone Allowance - 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."

The ESRI research also indicates that an individual's non-pension assets such as second homes and cash savings play an important role in determining how prepared they are for retirement.

When only the State pension or other pension-related income are factored in, around 24% of those approaching retirement were deemed to be at risk of poverty.

However, when the definition of income in retirement was broadened to include other financial assets  including half the value of owner-occupied housing, the proportion of those considered at risk of having inadequate resources in retirement "substantially reduces" to around 9%.

The ESRI study also indicates that those with the lowest levels of education were also most likely to fall under the official at-risk-of-poverty threshold.

In recent decades, government policy has been underpinned by retirement income adequacy targets in comparison to pre-retirement earnings.

However, ESRI economist Dr Barra Roantree, who co-authored the report, said this measure may not pick some of those at risk of poverty, and recommends that policymakers should take a broader range of measures into account when considering who is at risk of having inadequate income in retirement.

The study is based on data from the Irish Longitudinal Study of Ageing.