The dynamics of incomes and occupational pensions after retirement

This paper uses two waves of the UK Retirement Survey to look at how incomes change during retirement. We concentrate on men aged 65-69 and women aged 60-69 in 1988-89 and look at how their incomes change over the following five years. Overall, we find a considerable degree of stability in real incomes. We use the panel data to look at the incomes of widows before and after they are widowed and find that, for this group of relatively young widows, their low incomes are in large part determined by the fact that it tends to be the relatively poorer husbands who die among this age-group. Finally, we consider the most important component of private income — occupational pensions — separately. We find a strong relationship between pension level and the probability of indexation — pensions that start low are less likely than higher pensions to keep up with inflation.