The different income challenges facing the elderly in their retirement years have been well illustrated by reports from the Centre for Ageing Research and Development in Ireland (Cardi). The widening income gap between rich and poor – so evident among those in the working age group in recent years – is also replicated among older people.
Among the latter, some of the better-off often find they are asset rich and cash poor: their main capital – invariably their home – yields no income, and their pension income may be declining in real terms, failing to match either earnings or inflation.
But the plight of poor older people is more difficult and desperate. Their financial challenges are far greater, while their scope for adjusting their spending patterns is far less. Between 2009 and 2011, the incomes of the poorest pensioners fell by €24 a week to €185 – an 11 per cent decline. Over the same time period, the decline in the incomes of the richest pensioners was just 7 per cent.
The report helps to illustrate and underline how the life cycle of poverty operates: how older people who are now poorer were also poorer when younger, during their working life. There are many reasons: less educational opportunity may have left some with limited job skills that only qualified them for low-paid jobs, where the risk of unemployment was greater. It meant they could save little for their retirement years. And, since the financial crisis, the State pension has scarcely increased.
Paul McGill, author of the reports, has emphasised the importance of designing social and economic policies that address the root causes of inequality across the life cycle. He has argued for policies to protect the poorest and the most vulnerable.
In that regard the Government, in preparing the 2015 budget, should take note of these reports. And, as a first priority, it should consider restoring the €24 a week that the poorest pensioners – those who can least afford it – have lost.