New TILDA study examines retirement income and quality of life in older
Looking at over 8,000 people aged over 50 in Ireland the research found that individuals living in households with higher incomes experience a higher quality of life. Focusing on the 325 individuals who transitioned into retirement during the survey period (between 2009 and 2015), the report found that 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 in older people.
- Income is positively associated with quality of life in older age. Individuals in the highest quintile of household income score on average 29.6 on a quality of life measure. This compares to an average quality of life score of 26.2 for individuals in the lowest income quintile of household income. This means that those in the highest quintile score 13% higher for quality of life than those in the lowest quintile.
- All aspects of quality of life (control, autonomy, self-realisation and pleasure) increase consistently with household income.
- Around 31% of the overall group of Irish retirees studied report that shortage of money never prevents them from doing the things they would like to do, while around 13% report that shortage of money often prevents them from doing the things they would like to do.
- However, differences in the proportions affected by shortage of money exist across income quintiles. For example, around 19% of retirees in the lowest income quintile report that a shortage of money often stops them from doing the things they want to do compared to only 3% of those in the highest income quintile reporting this.
- For retirees in the lowest income quintile, 25% report that a shortage of money never stops them from doing the things they want to do compared to 40% of those in the highest income quintile.
- Retirement income replacement rates are calculated for each individual transitioning from employment to retirement between 2009 and 2015. The retirement income replacement rate is expressed as the ratio of post-retirement pension income to pre-retirement labour income. The median replacement rate is 51.4%. For example, this means that someone with a weekly salary of €500 would be left with a weekly income of €257 on retirement.
- Retirement income replacement rates are not associated with quality of life post-retirement. The study shows that it is the income that people are on, pre and post retirement that is related to their quality of life, not the rate at which their income changes or the relative proportion of income they maintain from pre-retirement into retirement.
Quality of life was measured through what's known as the CASP-12 measure, a brief self-report inventory that incorporates four dimensions of quality of life (control, autonomy, pleasure, self-realisation) specifically developed for use with older people. Control looks at the ability to actively participate in one's environment; autonomy looks at things like how health or a shortage of money affects a person's ability to do the things they want to do; self-realisation regards satisfaction with life so far and feelings about the future while pleasure relates to the sense of happiness from engaging with life.
Lead author of the report Dr Irene Mosca, TILDA Research Fellow said: "The finding that shortage of money does 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. "
Dr Mosca continues "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 2 years. More waves of TILDA will inform if these relationships between income and quality of life and replacement rates and quality of life are sustained over time".
David Harney, Chief Executive, Irish Life Group said that, as a long-term supporter of TILDA, Irish Life was particularly interested in this piece of research. "The findings are consistent with our analysis of peoples' spending patterns in retirement which showed that the majority of people had reduced spending power compared to when they were working. However, consumption patterns also change in retirement as people have less outgoings. The strong association between income and quality of life in older age again highlights the need for people to save for retirement. We recommend a target of one third of salary, plus the state pension, for people to enjoy a comfortable retirement," he said.
TILDA is funded by the Department of Health, The Atlantic Philanthropies, and Irish Life plc. Irish Life has recently committed to extending its support for a further five years.
The full report is available here.
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Dr Irene Mosca, Research Fellow, Trinity College Dublin, at email@example.com
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