One in five people in Ireland would run out of money within a month if income stopped

One in five (20%) people in Ireland say they could maintain their standard of living for less than one month if their regular income stopped tomorrow. A further one in four (25%) say they’d manage for three months at most.

According to new research from Royal London Ireland, a leading provider of life insurance and pensions in Ireland, 5.5 months is the average length of time people believe they’d be financially stable following a halt to their income. Of 1,000 adults nationwide, just one in seven (15%) said that they could cope for between six months and a year, and one in six (17%) said they could do so for more than a year.

Those aged 35-44 were found to be most exposed to immediate financial pressure, with one in four (26%) saying they could maintain their current standard of living for no more than one month if income stopped tomorrow.

While men are more likely than women to believe they could preserve their current standard of living for at least six months if income stopped tomorrow (36% vs 28%), one in five men (19%) say they could do so for more than a year – compared to 15% of women.

Commenting on the findings Barry McCutcheon, Protection Proposition Lead, Royal London Ireland said,

“While some households appear to have a reasonable financial buffer in place, the findings highlight how vulnerable many others could be if their income were to stop suddenly. It is particularly striking just how many people could only maintain their current standard of living for a relatively brief period of time – for example, one in five believe their finances would not last beyond a month. For many families, this leaves very limited time to adjust to a sudden loss of earnings.

“Income can be interrupted for many reasons, including illness, injury, or redundancy.

“The general guidelines are to aim for savings equivalent to three to six months of essential expenses, where possible. But setting money aside in savings can be challenging once mortgage or rent payments, childcare, insurance and everyday household costs have been covered”.

 

Additional highlights:

• Fewer than one in ten (7%) 25-34 year olds believe they could sustain their current standard of living for more than a year, compared with more than one in four (27%) of those aged over 55.
• Men estimate they could maintain their standard of living for six months on average, compared with five months for women.
• Those aged over 55 report the strongest resilience, expecting to maintain their current standard of living for an average of just over seven months, compared with just over four months among 25-34 year olds.
• Dubliners report the longest average timeframe at six months, while those living in Connacht estimate four months.
• People living in Connacht and the Rest of Leinster are the most financially vulnerable, with more than one in four (26% in rest of Leinster and 27% in Connacht) saying they would not be able to financially survive for a month if they lost their income.

Dubliners are the most financially resilient, with more than one in five (22%) saying they could financially survive for over a year without income, followed by those living in Ulster (18%).

Mr McCutcheon continued,

“The differences across age groups, genders and regions show that financial resilience is often shaped by life stage, household commitments, income levels and the opportunity people have had to build savings over time.

“It is perhaps unsurprising that older households report a stronger ability to withstand a sudden loss of income, as they may have had longer to build reserves, reduce borrowings or clear a mortgage, while often facing fewer day-to-day family expenses. By contrast, younger adults are frequently managing some of the most financially demanding years of their life, balancing childcare, housing costs, career progression and long-term savings goals all at once.

“The gap between men and women is also notable. Career breaks, part-time work and caring responsibilities can have a lasting impact on earnings and the ability to build financial reserves, leaving some households with less flexibility if income is disrupted.

“Regional differences are equally telling. While urban living can be more expensive, access to larger employment markets, stronger transport links, and a wider range of services may help some households feel better placed to manage financial shocks, whereas those in more rural areas may face added costs and fewer options.

“The wider message from these findings is that unexpected income shocks can affect any household at any stage of life. Building savings remains an important first line of defence, but households should also consider the wider protections available to them if illness, injury or other unforeseen events were to interrupt regular earnings. The more preparation people have in place, the better positioned they are likely to be to protect their standard of living during difficult periods. Talking to a Financial Broker is a good first step in putting a plan in place to cover possible financial life shocks.”

ENDS