The effects of age and income on retirement decisions: A comparative analysis between Italy and the UK

Abstract

Governments of many Western countries are committed to render the pension system sustainable in the long term. We study the links between pension reforms, retirement age, income and retirement decisions by examining data from two nationwide surveys in Italy and the UK. While the Italian system remains centred on state pension, the UK places greater emphasis on private savings and on the increase of retirement age. Our analysis of the differences in retirement decisions between the UK and Italy over a ten-year period (1992–2002) allows us to determine the effective retirement ages and reveal a greater volatility in the average Italian retirement age compared to the UK. By investigating the relationship between income and retirement age, we conclude that, in both countries, high earners retire relatively early, while those in the lowest income groups tend to retire later; however, there are marked differences in the way our two samples behave over the period studied.Pensions (2008) 13, 167–175. doi:10.1057/pm.2008.12 [ABSTRACT FROM AUTHOR]