Evolvement of a household’s income after retirement: A microeconomic study into French and Spanish households

Abstract

Replacement rates are an effective way to analyze how income evolves following the retirement of an individual as the ratio of pre- and post-retirement income. Individuals generally live in a multi-person household, which should be taken into consideration in the study of replacement rates. Several European countries have committed themselves to reform their pension system with the objective to reign in public spending. The present study analyzes how household income evolves following the retirement of a household member to describe the current situation that households face. It does so by means of the EU SILC dataset, which is microeconomic and longitudinal data. It finds that household income falls following the retirement of a household member, however that households can maintain their standard of living based on a threshold for replacement rates advanced by previous authors.