independent

Wednesday 16 April 2014

Fortysomethings failing to plan for retirement

Fortysomethings are failing to plan for their retirement

TODAY'S forty-somethings must work three years more than their parents to claim a state pension -- but that's not having any impact on their retirement plans.

New research shows that the Government's decision to hike the age of eligibility for a state pension has not caused Irish people to change their retirement goals.

The study from Trinity College Dublin showed that people are far more influenced by their peers than the state pension age when it comes to retirement planning.

Those who work beyond the age of 65 are happy to do so if most of their peers are working, the research found. But changes to the state pension age have had little effect on people's retirement plans, academics said.

The Government announced changes to the age of eligibility for a state pension in 2010. It will rise from 65 to 66 from January, moving up to 67 in 2021 and 68 in 2028.

The decision was taken in a bid to contain pension costs as Ireland's population ages and to encourage people to remain in the workforce beyond 65, translating into higher gross domestic product and a boost to the economy.

At the time, many said their retirement plans had been derailed and that they were being forced to work longer than previous generations. But the study dismisses these concerns.

There was no noticeable difference, it said, in the age people said they expected to retire after March 3, 2010 -- the day on which the policy announcement was made.

Creative

"Governments often operate on the basis that they can change people's retirement decisions by using obvious policy tools such as changing the state pension age," said researcher Dr Eibhlin Hudson.

"However, these results show that older people are more likely to remain in work if they see their peers doing so.

Hence, achieving the goal of extending working lives may require very creative policies, such as facilitating older people in workplaces designed for younger people."

The research, called The Irish Longitudinal Study on Ageing, surveyed almost 9,000 people aged 50 and over between 2009 and 2012. They will be surveyed again next year.

Irish Independent

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