Patterns of work and retirement in a pension system with a flexible old-age retirement age: a register study of Finnish employees and self-employed persons born in 1949

The aims of this study were to explore patterns of work and retirement of Finnish employees and self-employed persons in a pension system with a flexible old-age retirement age and how income develops in these patterns. We used individual-level register data from Statistics Finland of the total Finnish birth cohort born in 1949. The cohort was 62–70 years old over the study period 2011–2019. Sequence and cluster analyses were used to identify typical trajectories of individuals’ transitions in and out of salaried work and self-employment and work in old-age retirement. Our analysis yielded a ten-cluster solution: four clusters were found for employees who did not continue working in retirement (62%), four clusters for those employees who continued working in retirement (26%), and two clusters for the self-employed (12%). The clusters differed by the timing of retirement. The results showed that employees who retired earlier on an old-age pension and who were not working afterwards had lower incomes. Their incomes also decreased after old-age retirement. Employees who worked for several years in retirement had higher incomes which remained stable between the ages of 62 and 70. We found two types of self-employed persons: those who continued working in retirement with high incomes and those who stopped working earlier and had lower incomes. The results indicate that inequalities between lower and higher income groups might become exacerbated in a flexible retirement system.