Income inequality in later years: occupational trajectories or initial social characteristics?

Area of Science:

• Socioeconomics
• Retirement Planning
• Swiss Pension System Analysis

Background:

• Personal income after retirement in Switzerland is primarily derived from financial reserves.
• The formation of these reserves is influenced by a complex interplay of individual and systemic factors.
• Understanding these determinants is crucial for assessing long-term financial security in old age.

Purpose of the Study:

• To investigate the factors constituting financial reserves for retirement in Switzerland.
• To examine the influence of positional (sex, birth cohort), processual (occupational trajectories), and structural (pension system) factors.
• To test hypotheses regarding the interactions between these factors in shaping financial reserves.

Main Methods:

• Utilized retrospective biographical data from the SHARELIFE dataset (2009).
• Employed Optimal Matching Analysis (OMA) to define occupational trajectory types.
• Applied hierarchical clustering and regression tree methods to assess factor interactions.

Main Results:

• Occupational trajectories significantly influence the level of financial reserves available in later life.
• Processual factors (occupational trajectories) interact with positional factors (sex, birth cohort).
• The Swiss retirement schemes amplify the impact of positional factors on financial reserve accumulation.

Conclusions:

• Occupational pathways are key determinants of retirement financial reserves.
• Interactions between individual characteristics and career paths are critical for financial preparedness.
• The structure of the Swiss pension system plays a significant role in how these factors ultimately affect retirement finances.