Shortage of money ‘not a major issue’ for most retirees

Retirees less likely to have financial difficulties than those working, says Trinity report

Shortage of money is not an important issue for the majority of retirees in the State, according to a surprise finding in a new study on ageing.

A report by the Irish Longitudinal Study on Ageing (Tilda) – a Trinity College Dublin research body – investigates the relationship between income and quality of life in older age in Ireland, and shows that retirement income is positively associated with quality of life.

The report looked at more than 8,000 people aged over 50, focusing on 325 people who retired during the survey period between 2009 and 2015.

The report found it is actual income in retirement, rather than the proportionate change in someone’s income from that received before retirement, that affects quality of life.


Individuals in the top 20 per cent of household income scored on average 29.6 on a self-assessed quality of life measure. This compared to an average quality of life score of 26.2 for individuals in the lowest 20 per cent in terms of income.

The researchers found that all aspects of quality of life, including control, autonomy, self-realisation and pleasure, increased consistently with household income.

About 31 per cent of the overall group of retirees studied reported that shortage of money never prevented them from doing the things they would like to do. Only 13 per cent reported that shortage of money often excluded them from activities.

There were differences in the proportions affected by shortage of money across income levels. About one in five retirees in the lowest income group reported that a shortage of money often stopped them from doing the things they wanted to do, compared to only 3 per cent of those in the highest income quintile.

Researchers found that retirement income replacement rates were not associated with quality of life after retirement. The replacement rate is expressed as the ratio of post-retirement pension income to pre-retirement labour income. The median replacement rate is 51.4 per cent.

The researchers said the finding that retirees were less likely to report financial difficulties than those still working was “somewhat surprising”, considering the drop in income usually experienced at the time of retirement.

Consumption patterns

Lead author Dr Irene Mosca said the finding that shortage of money did not seem to be an important issue for the majority of Irish retirees might be attributable to the fact that consumption patterns do change over time.

“Compared to when in employment, retirees are more likely to have more time to shop around, to have paid off their mortgage, to have fewer dependants and not to have to save extra for their retirement,” she said.

“Overall, the findings of this report suggest that it is the income that people are on, pre- and post-retirement that affects their quality of life, not the rate at which their income changes. It is important to note, however, that a limitation of this analysis is that it only examines follow-up after retirement of up to a maximum of two years.”

Dr Mosca said future iterations of the Tilda study would clarify whether the relationships between income and quality of life and replacement rates and quality of life were sustained over time.

It is predicted that the number of people aged 65 years and over in the State will double between 2011 and 2046.

The report – funded by Irish Life, Atlantic Philanthropies and the Department of Health – says this demographic shift will bring with it a number of challenges, one of which is how to ensure that gains in longevity are matched by gains in quality of life.