The Economic Casualties of Retiring Because of Unemployment

This research reports on one aspect of a multimethod study which investigated the effect of involuntary retirement on retirement income. Using the Survey on Ageing and Independence 1991, a secondary data analysis was carried out which examined the economic effects of retiring because of unemployment. This analysis was followed by interviews with 33 men and women whose retirement was induced by unemployment. In the secondary analysis, when the respondents who retired for reasons of unemployment were compared to those who retired for other reasons, there was little doubt that the unemployment retirees were disadvantaged on human capital variables, in terms of their work history, and ultimately, in their retirement income, whether personal or household. Returning to work part-time after retirement did not appear to raise their incomes which were lower than the incomes of those who retired for other reasons. Furthermore, they were more likely to receive government transfer payments such as disability benefits or social assistance. When the factors that significantly contributed to their income in retirement were considered they were a function of personal wealth such as investments and a private pension. The public pension system did not have a significant influence on their retirement income. In the convenience sample, all respondents reported that unemployment lead to a drop in retirement income. For those most severely hit by unemployment, the transition period was extremely stressful with people reporting high levels of anger, depression, and sadness and constant worry about their straitened circumstances. People coped with their drop in income by changing their lifestyle, giving up valued assets like their homes and dipping into their savings and RRSPs. These strategies, in turn, depleted their resources for retirement and caused considerable consternation about what they saw as an uncontrollable and unforeseeable future. People also relied heavily on social assistance and disability benefits to survive until the age where they were eligible to draw down their retirement benefits. When they had to draw down their retirement pensions earlier than expected, they were frustrated because they had to accept lower pensions, a feeling that was compounded when they discovered that, if they were lucky enough to secure part-time work, this resulted in further reductions in their pensions. The incongruity of government retirement policy threats of cutbacks to pensions or raising the age of retirement -- did not escape most retirees in our sample and served to create more uncertainty and stress for an already economically distressed group of Canadians.