FOR ALL THE discourse in Ireland around housing anxiety and pension anxiety, there isn’t enough that combines both these anxieties into one.

So, let us helpfully do it for you. We’ll start with the pension anxiety first.

There are normally a few reports every year which are cheerily headlined along the lines of ‘how much should I be putting into my pension to have a retirement not spent in crushing poverty’.

The latest was a report published a few weeks ago by the Pensions Council, which was carried out on their behalf by KPMG.

The headlines all carried similar variants of the same alarming information: single people would need about €33,000 a year from their pension to have a ‘comfortable’ retirement, according to the report. 

The state pension is currently about €1,200 a month, or €14,400 a year. So that means, theoretically, you would need the guts of €19,000 a year coming from your own private pension to make up the difference.

Then consider that about one third of private sector workers have no separate pension at all – and almost half of people plan to rely on only the state pension.

Ok, ok. So far, so bad. But it’s about to get worse.

Let’s dive into our second anxiety – housing. The Pensions Council report demonstrates how you have to own your own home for the sums to add up. Renting is essentially not even considered as viable.

To show this, let’s take a closer look at the report.

The study envisages three broad categories of retirees, based on how well-funded their pensions are.

‘Comfortable’ means being able to save money for unexpected bills, and even help out family members with financial expenses. This assumes a pension income of €2,800 a month for a single person or €3,600 for a couple.

‘Moderate’ is envisaged as someone who can meet their day-to-day expenses and travel without undue strain, but has to be careful with their money. The pension needed here is €2,300 a month for a single person and €3,100 for a couple.

And then ‘modest’ is defined as someone who only has their basic needs covered – they would need a pension of €1,600 a month, rising to €2,400 for a couple.

To cut to the chase: in all three categories, it’s expected that someone would have low or virtually no housing costs in retirement beyond bills and repairs.

The numbers don’t add up for renters

The researchers noted that for both the ‘moderate’ and ‘comfortable’ categories, they assumed the person would be ‘almost always a home-owner, with some money spent on home decorating’.

Even for someone with a ‘modest’ pension, the report notes this person would likely be ‘typically a home-owner, but may be renting (most commonly from a local authority)’.

Basically, the report assumes that pensioners will either be homeowners, or have state-subsidised housing. Renting privately is not really considered.

This is reflected in the assumed housing costs. It is assumed that a pensioner would spend a maximum of €900 a month on housing costs, including utilities.

To be fair, the report does acknowledge that its assumptions don’t really apply to private renters.

There’s even a specific caveat: ‘We realise that national averages will mask specific circumstances, such as renting in Dublin, material healthcare costs, or travel costs to see children abroad, that would all increase the amounts required to meet each of these subjective states.’

The thing is, the numbers don’t make sense for any pensioners renting privately, not only those in Dublin.

Given it’s estimated the average Irish household spends about €300 a month on electricity and gas, that would be about €600 a month left for housing costs (leaving aside for a minute other bills such as rubbish collection). 

Average rental costs across Ireland or existing tenants right now are €1,400, while the figure is up to €1,600 for newly-registered contracts. The upshot? €600 is unlikely to go very far in the private rental market.

And even if you somehow miraculously found a place at that price, with inflation or new tenancies rising at just over 8% a year, if the landlord evicted you for any reason, your chances of finding another in a year or two would be roughly zero.

And it’s not like we can just pretend private renters don’t exist in old age – they do.

Ireland’s home ownership has been falling relatively slowly but steadily, dropping from 70% in 2011, to 68% in 2016, to 66% in 2022.

As this number falls, there will be a rise in the number of people relying on the private rental market, even into old age.

This is a phenomenon which we can already see being borne out.

Census figures compiled by the CSO show the number of people aged 65 and over who are renting has surged in recent years, almost doubling from 30,800 in 2011 to slightly under 54,000 in 2022.

In such a short space of time, this is a major increase. And it’s a number which is likely to keep growing as house prices continue to rise and ownership rates contract.

But we’ve already established that our pension system basically assumes that people will own a home once they hit retirement age.

What happens when that doesn’t happen?

Let’s go back quickly to the numbers for a ‘modest’ income household.

It’s assumed that a single person would have a total pension income of €1,600 a month, with most of this coming from the state pension.

Housing costs, including bills, are meant to be only €600 a month. But average private sector rents, even for existing tenants, are €1,400 a month – basically equal to the hypothetical pensioner’s entire monthly income.

Quite simply, the sums don’t add up.

Let’s talk about solutions

So, what happens?

As things stand, the most likely outcome is those retirees who have to rent face living in – or near – poverty.

It’s harsh to say but this is the reality non-homeowners relying on the private rental market face under Ireland’s current pension system.

Especially as it’s estimated about a third of older people rely on social welfare payments for 90% of their income.

While at the same time, more than one-in-three people aged 65 and over living alone are at risk of poverty.

Tens of thousands of people are already renting into old age with those numbers likely to swell considerably in the coming years and decades.

Ireland doesn’t tend to do long-term planning particularly well – take a look at any major infrastructure project, or the torturous process to get pension auto-enrolment up and running.

But the state should start looking at solutions now to help people who will be renting in the private market past retirement.

Ireland has already created a sovereign wealth fund. Perhaps swelling this and then using it to supplement pension incomes could be an aid.

Or a massively increased level of affordable rental accommodation – something which the state has already dipped its toe into with cost-rental projects.

Or perhaps something a bit more left-field, such as mass-printing cheap homes.

Whatever the solution is, it should be investigated and acted on quickly.

The alternative is that tens, possibly hundreds of thousands of people on lower incomes – many of whom will have worked for most of their lives – could end their days living in financial hardship.

This is something which should not be allowed to happen. And with some imagination and forward planning, doesn’t need to.