Higher income means a higher quality of life in older age, especially if you have some savings such as RRSP set aside. The latest research from the Irish Longitudinal Study on Ageing at Trinity (TILDA) has found, with all aspects of quality of life increasing with household income. This is despite additional expenses that you could face such as paying for assisted living lincoln ne for example.
The latest report from TILDA, which focused on 325 individuals who transitioned into retirement between 2009 and 2015, has found that it is actual income in retirement, instead of proportionate change in income before and after retirement that affects quality of life. The study, which for the last decade has surveyed thousands of participants aged 50 and over, has attempted to collate data on the issues facing old people in Ireland.
The report found that income is positively associated with quality of life in older age, and that those in the highest proportion of household income had a 13 per cent higher quality of life than those in the lowest income category. A strong incentive to take control of your finances early, and start setting aside that nest-egg. Doing some research online for tips to build your disposable income could be a good way to start, because there are many entering retirement without a safety net. Disposable income could come in handy should obstacles present themselves, such as medical support, unexpected debt, etc. You may also want to consider developing a stock portfolio focused on capital growth or dividends, if you are interested you may want to have a look at Stocktrades.ca to stay informed on current market trends.
Thirty-one per cent of the overall group of Irish retirees said that “shortage of money never prevents them from doing the things they would like to do”, while 13 per cent said it often does. However, the proportion affected by shortage of money varies across different income levels, with 19 per cent in the lowest income category stating that money often stops them from doing the things they would like to do versus 3 per cent in the highest income category saying this.
The study calculated retirement income replacement rates as a ratio of retirement pension to pre-retirement income. The average replacement rate was revealed to be 51.4 per cent which means someone with a weekly salary of €500 would have an income of €257 on retirement. The study indicates that this ratio is not associated with quality of life in retirement. It is the actual income before and after retirement that impacts quality of life instead of the proportionate change in income.
Quality of life was measured across four dimensions – control, autonomy, pleasure and self-realisation. The framework for this measurement was drawn from Maslow’s famous hierarchy of human needs, which are supposed to be universal and objective.
Control assesses a person’s ability to participate in their environment, autonomy looks at self-determination and the impact of health or shortage of money on a person’s ability to do what they want to do. Pleasure regards the pursuit of enjoyable activities and self-realisation describes the fulfilment of oneself. All aspects of quality of life increase consistently with household income, the report finds.
In a press statement, TILDA Research Fellow and lead author of the report Dr Irene Mosca 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 dependents and not to have to save extra for their retirement.”
One limitation of the study is that it only examines two years after retirement. “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”, Mosca added.
The findings could have an important impact on the insurance industry. In a press statement, Chief Executive of Irish Life, David Harney, said: “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.” Insurance company Irish Life part-funds TILDA and recently committed to extending its funding support for a further five years.
“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 added.
