Those living alone at greater risk of income inadequacy in retirement

Those who are not married or cohabitating in the years before retirement are at greater risk of having inadequate income in retirement, according to a new study published today by the Economic and Social Research Institute (ESRI).

Using data from The Irish Longitudinal Study of Ageing (TILDA), the study examines whether those who are currently aged 60-65 will have enough income for retirement using a range of income adequacy benchmarks. Although assessments are sensitive to the precise benchmark used, those who are not married or cohabitating in the years before retirement stand out as being at risk of both replacing a small share of previous earnings and of falling below the official at-risk-of-poverty line: commonly used measures of income adequacy in retirement.

Dr. Anne Nolan, an Associate Research Professor at the ESRI and an 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.”

Other findings contained in the study include:

  • relatively few of those approaching the State Pension Age are likely to fall beneath the official at-risk-of-poverty line in retirement – 9 per cent using a definition of retirement income that includes pension income and income from financial assets. This compares with 14 per cent for the population as a whole in 2018.
  • non-pension wealth (e.g., second homes, cash savings) plays an important role in individuals’ preparedness for retirement. For example, incorporating income from financial assets reduces the share who would be considered at-risk-of-poverty from 24 per cent when considering only income from state and supplementary pensions to 9 per cent.
  • replacement rate measures – which relate income in retirement to the amount of pre-retirement earnings or income they replace – identify a very different group who are at risk of having inadequate income in retirement than poverty line measures. For example, while those expected to replace less than 50 per cent of their pre-retirement earnings in retirement tend to have higher levels of education, those likely to fall under the official at-risk-of-poverty threshold are those with the lowest levels of education.

Dr. Barra Roantree, an economist at the ESRI and another author of the report, 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.”


A webinar, which discussed the findings of the report, took place on Tuesday 21 July 2020. You can view the video below.