A long arm of adversity? Financial hardship during the life course and income in retirement

Data from the Survey for Health, Ageing and Retirement in Europe (SHARE) are used, combining retrospective information on respondents’ experienced financial hardship and their current pension income (N = 38,574). The authors apply two-part regression models with country-fixed effects to estimate the associations of pension income with hardship that starts in one’s youth (age <20), the transition to adulthood (age 20-29), mid-career (age 30-44) and late career (age >44), as well as with the duration of hardship.

The results show that financial hardship during the life course does not always have negative consequences for income in old age. We find positive associations of pension income with financial hardship in youth (among men) and in early adulthood (among women). These results suggest that short spells of financial hardship are often related to crucial life-course transitions that allow subsequent career development and pension accrual. In contrast, financial hardship in late career is negatively associated with pension income, especially among men in Continental and Southern European countries.