Transition from Work to Retirement
Many studies have looked at retirement age but none of them connect age to the manner of transition between an active life and retirement, nor describe the changes in behaviour during that period.
The study Transition travail-retraite (French only) aims to fill this gap. Using administrative data taken from annual income tax returns, it presents an innovative approach to calculating age and income replacement rate at retirement. The method consists in identifying retirement age by analysing the make-up of income during a given period (1991 to 2001). Retirement is characterized by a significant and permanent decrease in employment income and the appearance of a permanent retirement income.
This type of study provides a new tool to follow the annual changes in certain indicators regarding retirement, including retirement age, income replacement rate at retirement and the rate of phased retirement. In the first edition of Transition travail-retraite, the indicators are as follows:
- Quebeckers retire on average at age 59. Women retire earlier than men, and even earlier if they have a spouse.
- During the first half of the 1990s, retirement age decreased and reached a low in 1997, the year the public and parapublic sectors introduced retirement incentive programs. It is too early to say whether the reversal identified in 1998 and 1999 is basically a rebound from the massive departure of young retirees in 1997 or the actual reversal of a trend.
- Actively saving for retirement translates into an earlier retirement age, on average 6 years earlier in the case of persons who have a supplemental pension plan (pension fund) or a registered retirement saving plan (RRSPs).
- Also, those in the higher earnings bracket retire on average 4 years earlier than those at the lower end of the pay scale.
- The income replacement rate fluctuated during the 1990s, averaging 70%. This rate is directly proportional to income: persons with a lower income generally experience a higher rate of income replacement than those with higher incomes.
- Most people have already stopped working or stop working when they begin receiving retirement income (81%). The others are in a phased retirement of sorts.
- About 6% of persons appear to have retirement thrust upon them. These persons experience a period of inactivity (no employment income) before they begin to receive retirement income. An average of 3 years pass between the time they stop working and the time they begin receiving retirement income.
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