Tuesday 12 December 2017

It pays to be retired amid this taxing recession

Charlie Weston Personal Finance Editor

PEOPLE over the age of 65 are the most financially secure -- but those between the ages of 35 and 54 feel they have been hit hardest by the recession, a new survey shows.

Those in their 30s, 40s, and 50s have been the most impacted by increased taxes, salary cuts and property value crashes, according to the findings of the Standard Life financial confidence index.

Separate research by the Irish Independent has found that a working couple on €50,000 is paying €3,000 more in income tax than a pensioner couple with a retirement income of €50,000.

And older people are up to €5,000 better off a year than younger people when other benefits such as free travel, free medical cards, and money towards heating and telephone bills -- as well as lower income tax -- are taken into account.

Last week, the International Monetary Fund (IMF) called for a clampdown on some of the benefits pensioners get.

The Standard Life research found that all age groups are feeling less confident than they did five years ago.

But the older generation have been least affected by the savage downturn.

Brendan Barr, of Standard Life, said: "Those aged over 65 are still far and away the most financially confident."

He said those in middle age were the most impacted by the recession.

"These age groups are probably the most hit by the economic downturn, which has seen increased taxes, salary cuts and lower asset values," he said.

The survey, which was carried out among 1,003 adults by Research Plus, found that those between the ages of 25 and 34 were more financially confident than most other age groups.

This is because they are likely to be working but not yet tied down with a mortgage.

The IMF angered older people last week when it called for cuts to non-means-tested state pensions, further means-testing of the over-70s medical card and means testing of the household benefits package.

Benefits

There are 458,000 pensioners in the country, according to Central Statistics Office figures; and the benefits they get include:

• An allowance of 1,800 units of electricity a year, which is worth €430 a year, according to information on the website of Fine Gael TD Tom Hayes.

• Pensioners do not have to pay for a TV licence, which saves them €160.

• A telephone allowance worth €267 a year, according to Mr Hayes.

According to calculations for this newspaper by tax expert Cathal Maxwell, of paylesstax.ie, pensioners pay less income tax than younger people.

This is because those over 65 do not pay PRSI, which is 4pc for most people, and they get an age-related tax relief.

While the medical card could be worth around €1,000 a year if the holder visits a GP 20 times in a year.

Spokesman for Age Action Eamon Timmins said he was puzzled by the findings of the Standard Life survey that older people felt financially secure.

"We are living in an age of uncertainty and most older people are at that stage where there earning potential is coming to an end," he said.

But he conceded that some of the financial benefits older people get are generous.

Irish Independent

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