Occupational Changes Following Disability Onset in the Late Working Years

The onset of a work-limiting health condition in the years approaching retirement
significantly reduces earnings and income, and leads to a sustained increase in the risk for
poverty in both the late working years and into retirement. Schimmel and Stapleton (2012) found
that earnings among older workers two years after the onset of a work-limiting health condition
were 50 percent lower on average, and poverty rates were nearly double the rates for individuals
who did not report a work-limiting health condition. Wu and Schimmel Hyde (forthcoming)
reported that the likelihood of poverty in retirement was significantly higher for Social Security
Disability Insurance (SSDI) beneficiaries and denied applicants—both groups who had
substantial medical conditions—relative to older adults who had never sought SSDI before
retirement—and who were presumably healthier than the two SSDI groups.