No way out but working? Income dynamics of young retirees in Korea

Abstract

Older people in Korea have a higher risk of poverty than younger adults, but the dynamics of income changes around the time of retirement have received little attention. This paper attempts to fill this gap by examining changes in the level and sources of income around the time of retirement, with retirement being defined as separation from one's main lifetime employment. It uses longitudinal data from the Korean Labour and Income Panel Study's Waves 1–9, and follows 580 younger retirees aged at least 50 years who retired during 1998–2005. The paper demonstrates that the prevalence of low income across the retirement transition was related to gender, previous career status and current working status. In particular, there was a noticeable increase in the prevalence of low income among permanent retirees compared to those who continued working in retirement. It also examines different factors associated with the individuals' economic wellbeing after retirement, and finds that working status in retirement is indeed the factor that most influences the probability of low-income entry among male retirees, while for women, the nature of co-residence with working household member(s) and household assets most mattered. From this, the paper concludes that being in paid work after retirement remains an important substitute for the immature old-age safety-net in Korea.

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