9/30/2013 – How Does Household Income Change in the Ten Years Around Age 65? (EBRI)

This study constructs a measure similar to the traditional replacement rate: a post-65 to pre-65 income ratio, comparing the household income five and ten years prior to age 65 with that of household income five and ten years after age 65. While similar to the traditional replacement rate in terms of construction, it is different in one crucial aspect: The current measure does not necessarily compare pre and post retirement income, rather it compares pre and post 65 incomes. The reasons for this distinction are discussed below, but in a nutshell, in a large number of households at least one member continues to work after age 65, part-time in many cases, and may not fully retire until sometime after the traditional retirement age of 65. Limiting the analysis of retirement income to retired households would result in ignoring such households, who, ironically, might be delaying retirement because of insufficient income. Consequently, the current study analyzes the post-65 to pre-65 income ratios that households experience and how they vary across the retired population.

Read the full study at EBRI.