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Young pensioners: Few return to work

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Generous employer pension benefits and other financial resources leave many 50-something retirees with little need to keep working.

About one in five Canadian taxfilers retire before they reach 60, the age when public pensions kick in. Fewer than 1% of workers collect an employer-sponsored pension at any age from 50 to 54. But 5% of men and 4% of women retire at age 55, which is when many employer pensions offer unrestricted benefits to long-term employees.

Once retired, it seems that very little can persuade these young pensioners to go back to work. Only half of them worked for some pay the year after they retired, and only 30% of early retirees earned more than $5,000. Seemingly content not to have a boss any longer, many of them did not even want to be their own boss—fewer than 1 in 10 young pensioners reported self-employment income in the year after they retired. The likelihood of re-employment falls the older one is at retirement age.

Early retirement peaked in the mid-1990s when governments and other employers downsized and offered early retirement incentives. Early retirement has slowed as younger employees today are less likely to be covered by a pension.

On average, young pensioners’ earnings a year before retirement were 50% higher than those who did not retire early. Early pensioners continue to earn about two-thirds of their pre-retirement income after they stop working. Employer pensions account for more than 60% of young pensioners’ income.