Income change at retirement

Less than one-fourth of SIPP retirees made the transition from full-time work and no benefit receipt to benefit receipt and no work during the 32 months of the 1984 SIPP panel, and these full retirees appear to differ economically from those who had not fully retired during the 32 months. Income declined to 60 percent of preretirement levels for those who received Social Security benefits and employer pensions, and to 46 percent for those who received only one type of benefit after ceasing full-time work. Family income cushioned the decline. About one-third of retirees had larger changes in income shortly before or after observed retirement transitions than right at the retirement transitions. Larger changes in income were associated with changing one's work effort. Asset income was quite variable across the entire panel. A monthly view of persons in various stages of retirement has brought into sharper focus than has previously been recognized the many paths into retirement, often over an extended period of time, during which status may change back and forth. A one-time or occasional extension of the SIPP to perhaps a 5-year period for the near-retirement-age population would increase the proportion of retirees for whom the full process is observed in such great detail. Alternatively, information on the timing of changes in labor-force and pension status may be collected in a proposed new Retirement History Study that calls for interviewing persons at 2-year intervals over a 10-year period for a more accurate picture of the retirement process.