In 1950, there were about 320,000 people in Ireland over the age of 65. Just before the year 2000, this total reached 420,000 – meaning it took half a century, more or less, for the country to add 100,000 older residents. The next hundred thousand took just over a decade – with 530,000 people over the age of 65 by the year 2011. Since then, Ireland has entered a phase of truly extraordinary population growth in our older cohorts. It took just five years, to 2016, to add the next 100,000 over-65s – and less than four years to add another 100,000 – with the number of over-65s estimated to be 738,000 in 2020, compared to 630,000 in 2016.

This growth is expected to continue. In the half-century to 2000, the country added 100,000 people over 65. In just three decades from 2020, it is expected to add almost one million to its over-65 population. But these figures may, if anything, understate the size of the increase. Official population projections made in 2017 estimated that there would be 720,000 over-65s by 2020 – just three years later – compared to 650,000 in 2017.

However, experimental estimates of the population made using administrative data from 2020 – the best we can do until Census figures for 2022 are released later in the year – found that there were almost 740,000 over-65s. In other words, the growth in the over-65 population over just three years was under-estimated by one quarter – with the over-65 cohort apparently growing by almost 90,000 in three years and not 70,000.

This is not a glitch. Ireland's official population projections have always tended towards conservatism. Population projections made in 2012, using 2011 Census data, assumed that net migration in the late 2010s would be just 5,000 on the baseline, rising to 10,000 after 2021. The 'low migration' scenario actually assumed that migration would remain negative, at -5,000 per year, from the 2010s all the way to the 2040s. Net migration in the late 2010s was, in fact, over 20,000 per year – and in 2018 and 2019 above the 'high migration' scenario in either the 2011 or 2016 projections.

This conservatism is somewhat understandable if – at this stage – inexcusable. It is understandable because, for a century and a half from the 1840s – with a relapse in the early 2010s – Ireland suffered from population loss year after year, generation after generation. The idea that people would voluntarily choose to come to Ireland still has a novelty for those born in the 1980s or before, and perhaps can still be seen in those who rage online that Ireland is a basket case, offering nothing to the world but a poor standing of living, despite objective measures to the contrary.

But this conservatism is mistaken. For over a generation, Ireland has been a magnet for people reflecting the fact that it has found for itself, once again, a business model. In the 18th century, Ireland thrived making more and more linen for export to Britain, as well as by sending butter and beef to colonial plantations in the Americas. In the early 19th century, it sustained itself by helping to feed in the Industrial Revolution, selling growing quantities of food to Britain. In both cases, this was facilitated by preferential access to the large consumer market nearby. 

But from the Famine in the 1850s to the Single Market in the 1970s, its only business model, apart from some industry in what went on to become Northern Ireland, was the exporting of people. Since the Single Market, the country has a business model again: acting as a launchpad for largely North American firms to access the world's most valuable consumer market, the European Union, once again because of preferential access. Net migration in the period since the 1990s, while volatile, has averaged almost 25,000 per year. While there are always possible threats to that business model, it seems reckless – and almost deterministic – to plan our investment in our future based on the assumption that things will definitely go wrong.

And yet each time, our population projections understate future growth, reflecting perhaps an underlying notion that the good times couldn't possibly last. This is inexcusable because it implicitly assumes that there is a downside to overly optimistic population projections but none to overly pessimistic ones. Underestimating the number of 18-21 year-olds – again something that seems endemic to Irish policymaking – translates into underinvestment in higher education. The same is true of primary and secondary school cohorts. And of course for our older cohorts.

The timebomb

Much of what I wrote at the start about the scale of growth in our over-65 population will not at all surprise those who have been worrying for years about Ireland's future pension problem. Indeed, there are two distinct problems, reflecting two very different types of pension schemes. The first kind of pension – defined benefit – is really better thought of as a salary until death. The problem with this is certainly not for the recipient but rather for those who have to fund these indefinite payments, in particular the taxpayer. As these pensions are not self-funded, but instead 'pay as you go', if there are not enough of working age relative to those of retirement age, the system will collapse.

The second kind of pension is known as a defined contribution: instead of a salary until death, it is the nest egg that is drawn down bit by bit after retirement and, when gone, it is gone. Recent policy changes are attempting to bring about far greater enrolment among private-sector workers into schemes that will adequately set aside enough to fund lifestyles post-retirement. Greater and greater longevity is – in this light – a challenge for policymakers. (Incidentally, life expectancy is another area where policymakers – in this case, not only in Ireland but worldwide – seem reluctant to ever opt for what seems like an optimistic scenario, meaning that every decade since the 1950s, people have lived longer and longer in spite of demographers' caution.)

Perhaps the two main costs older households face relate to housing and to healthcare. On healthcare, as with pensions, policymakers have attempted over the last two decades to try and future-proof the system so that the funds are there to pay for hospital care needs in particular. But hospital care needs represent only the acute tip of a spectrum of care needs that, on average, grow with age and are inextricably linked to housing.

Asset-based welfare

This brings us to housing. Whether by accident or design – Ireland has opted for what Prof Michelle Norris describes as an asset-based welfare system. From the 1930s until at least the 2000s – and arguably still true today – the hope of the state was that, with sufficiently prevalent homeownership, people would have the equity in their own homes to pay for their care needs, rather than rely on the state. Certainly, until the 1980s, this was a two-prong system: to caricature somewhat, if you were working class, you would be provided with social housing which would then be sold off to you at a very heavy discount, while if you were middle class, the mortgage market would enable you to buy your own homes. 

Unfortunately, such an asset-based welfare system is predicated on ownership and, combined with the tax-privileged nature of owner-occupancy compared to other forms of wealth, results in a system that reduces housing mobility, meaning that the home you live in your early 40s is, typically, the home that you will die in.

But in a healthy housing system, there would be much greater mobility across housing types over the lifecycle. It may have made sense in the 1950s for there to be, by and large, just one housing type – family houses – because people formed households early in their adult life and life expectancy was barely above retirement age. However, by the 2050s, the typical lifecycle will look very different. Instead of 40-50 years of adult life, all lived in the family home, adults will have on average 80 years, across which there will be very different housing needs.

I have written before about the need for far greater housing for pre-family and no-family cohorts in their 20s, 30s and 40s. Ireland's needs include tens of thousands more units in purpose-built student accommodation, as well as perhaps between 150,000 and 200,000 more rental homes for those largely in their 20s and early 30s. But the same is true for "post-family" households. We are only starting to see the emergence of a downsizer apartment market, with homes for 'empty nesters' in their 60s. In some ways, this is a unique generation, who bought for tens of thousands of punts homes that are now worth hundreds of thousands of euro and who, by and large, enjoy defined-benefit pensions. For them, more than any other generation, viability is less an issue. But even for them, the break-even cost of a newly-built apartment is too high for this to have emerged yet as a mainstream housing type – which it must.

But there are at least two other types of housing that Ireland needs to introduce to ensure it has a housing system that can meet the needs of its residents, especially its older residents. The first is what is known as independent living. An independent living complex looks, at first glance, very much like a regular suburban apartment complex designed for downsizers. And that is on purpose: those in their 70s now would baulk at the idea of selling up their family home and moving into somewhere called "Golden Leaves", with a picture of smiling octogenarians beaming down at them. But independent living comes with on-site supports, such as physiotherapy, albeit these are subtle and these types of complexes usually also have very active social calendars.

A separate category of housing also largely absent from Ireland is known as assisted living, where medical supports are at a greater level – and more visible. If independent living is for your 70s, then assisted living is for your 80s. Both these types of housing effectively do not exist in Ireland in the 2020s. But the extraordinary growth of our over-65s population in coming decades means that the country needs to plan for sizeable fractions of the population living in each by mid-century. 

This is where the coordinative role of the state comes in. In a housing system dominated by the State – from planning and zoning through rent regulation and tax reliefs – the market is, by and large, not going to try and set up an entirely new type of housing without clear guidance from the State. As part of the Housing For All strategy, it is imperative that the State – as soon as practicable – develop templates for market and non-market provision of independent and assisted living complexes.

Some will argue that Irish people have no desire to live in this kind of housing. This is firstly an argument of luxury: of course, there are those who will stay in their family home until they die, even if other types of housing are available in the wider housing system. But that is only an option for those who own their own home. Further, it is at its core a cruel argument: "they have their homes, why should they look for housing more suitable to their needs?"

Back in 2016, together with Amarach Consulting and Lorcan Sirr, I co-authored a report on the housing needs of Ireland's older persons for the Housing Agency and the Irish Smart Ageing Exchange (ISAX). Part of that study included a survey of over-55s. While they were largely happy in their homes when asked what precisely they liked and disliked, what they liked about their homes was dominated by the area – networks of families and friends, in particular – and what they disliked related to aspects of the dwelling, such as the stairs and layout.

*****

This piece is the fourth and final in a series on how Ireland can engineer a healthy housing system. And I will conclude as I began. A healthy housing system needs its market and non-market elements to be responsive to overall housing need – and not just market demand. This includes housing need for all household types, not just the cusp-of-family households that have been and remain the intense focus of so much policy effort. Recognising that diversity of housing need – especially in the context of a dramatic increase in the over-65 population – means that housing and care needs of the over 65s need to be integrated and aligned to the framework shown again below. 

Whether old, young or in between, households in Ireland deserve a housing system that – across its market and non-market elements – cover the full income distribution. There should be no 'Group C', with incomes too low for new market construction to be viable and too high to be covered by subsidised housing schemes. This remains true when care costs, for older residents, are included. By bringing down housing and care costs, and by increasing the thresholds for state support, Ireland can have a healthy housing system. But, given the scale of future housing need, it needs to act now.

Further reading:

Insiders and outsiders: Data reveals the groups most likely to be excluded from home ownership

Stuck in the middle: Why 56% of renters have been abandoned by developers (and the state)

Need, demand, demographics: How Irish housing policy is creating a ‘forgotten middle’