The Truth About Retirees' Standard of Living

In its latest report, Asterès compares the standard of living of retirees with that of the rest of the population, particularly the working population.

In general, the financial circumstances of households are more favorable for retirees than for the rest of the population. Once imputed rent is taken into account, the average standard of living for retirees is higher than that of the working-age population. In terms of wealth or the likelihood of falling below the poverty line, the situation for those over 65 is also more favorable than that of the rest of the population.
 

Standard of Living: Higher for Retirees Than for the Working Population
Once imputed rent is taken into account, the standard of living for retirees is higher than that of the working population. 

Retirees’ disposable income and standard of living are lower than those of the working population. However, once imputed rents (rents that homeowners pay to themselves in national accounts) are taken into account—that is, when the data more closely reflects households’ day-to-day realities—retirees’ standard of living becomes higher than that of the working population.

• Retirees’ disposable income and standard of living are lower than those of the working population. Retirees’ disposable income (total income adjusted for taxes and government assistance) represents 84.3% of the average level for all households, while that of the working population represents 113.2% of the average level for all households. The gap narrows in terms of standard of living (disposable income adjusted for the number of people per household)—that is, once household size is taken into account—since retirees’ households are, on average, smaller than those of the working population: the standard of living for retirees represents 101.5% of the average level for all households, compared to 108.4% for the working population.
• The standard of living for retirees, adjusted for imputed rent, becomes higher than that of the working population. By taking into account the imputed rent that homeowners pay to themselves (which would be equivalent to the rent they would pay if they were tenants)—a method that provides a statistic closest to households’ actual living conditions—the standard of living for retirees reaches 107.8% of that of all households, compared to 106.0% for the working population. 

This is because retirees have more assets than the rest of the population. On average, households whose head of household is over 60 have assets exceeding €300,000, whereas the average for younger households is less than €300,000. As a result, retirees are more likely to own their homes than working-age adults: more than 62% of those over 60 are homeowners who did not purchase their home as first-time buyers, compared with less than 17% of those under 50.
 

Poverty: Older Households Less Affected
Households headed by people aged 64 and older are less affected by poverty than younger households. In fact, the poverty rate (defined as a standard of living below 60% of the median standard of living for French households) for those aged 65–74 is 10.7%, and 11.4% for those over 75. These are the lowest rates across all age groups, with those under 18 being the most affected by poverty (20.4%). This statistic does not include imputed rent; if it were taken into account, the poverty rate among the elderly would be even lower relative to the rest of the population. This low poverty rate among the elderly can be explained both by the level of their disposable income and by the lower inequality in its distribution.
• The median standard of living for those over 65 is broadly equivalent to that of the rest of the population. The median standard of living (excluding imputed rent) for those aged 65–74 is €24,560, and for those over 75, it is €23,230—a level comparable to the median standard of living for the entire population (€24,330).
• The distribution of living standards is less unequal among older adults. The interdecile ratio (living standard of the top 10% of households / living standard of the bottom 10% of households) is 3.0 for those aged 65 and older, compared to 3.5 for those under 65. This lower inequality in living standards among older adults partly explains their lower poverty rate, since the poverty rate is primarily a statistic on income distribution (living standards relative to the median living standard).