Future Irish retirees are set to have “substantially” lower rates of homeownership prompting a retirement poverty warning, according to the Economic and Social Research Institute (ESRI).

The research – funded by the Pensions Council – estimates that 65 per cent of those currently aged 35-44 are likely to become homeowners by retirement given current trends, compared to 90 per cent of those currently aged 65+.

The ESRI explained that lower homeownership rates mean a higher proportion of households in the rental sector and the continuation of rental payments into retirement. The research finds that reductions in homeownership of this magnitude could raise the proportion of older people (aged 65+) living in income poverty on an after-housing cost (AHC) basis, from 14 per cent at present, to as high as 31 per cent.

The research draws on data from the Survey on Income and Living Conditions (SILC) and the Irish Longitudinal Study on Ageing (TILDA) to develop a number of possible scenarios around the potential level of future homeownership in order to calculate the potential impact on income poverty rates in retirement.

Commenting on the findings, ESRI lead author of the report, Dr Rachel Slaymaker, said: “Homeownership in retirement currently provides a double dividend – lower housing costs and higher assets in retirement. Our findings suggest that homeownership rates will be substantially lower for future cohorts, particularly those currently aged 45 and under. Without intervention this will lead to significantly higher rates of income poverty in retirement for these cohorts.”

Furthermore, Pensions Council chair, Roma Burke, said: “The ESRI has predicted that one in three people aged 35-44 now won’t own a home by the time they retire. If you don’t own your home by the time you retire, your living expenses are still going to be significant, even if your income falls. This could cause many more older people to be at risk of poverty in the future, unless action is taken to address this important challenge.”

The ESRI said that while further income-based supports or direct housing cost interventions for future groups of retirees most at risk of income poverty could be considered, additional supports would likely place significant costs on the exchequer given the scale of the projected fall in homeownership for future retirement cohorts. Therefore, policy interventions at earlier stages of the lifecycle are critical to help lower the costs of housing that future cohorts will face in retirement.

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