Wealthier Canadians’ disposable income shrunk significantly during retirement years, while low income workers’ levels of extra cash didn’t change much, according to a Statistics Canada study released today.

On average, Canadians at age 75 had disposable incomes that equaled 80% of their incomes at age 55, the federal agency said.

The study used data from 1983 to 2004—the subjects were analyzed between ages 55 and 76—to determine the extent to which individuals at the age of 55 were able to maintain their family incomes as they moved into the retirement years.

Lower income workers (those in the bottom 20% of the income distribution) experienced little change in income as they moved from the age of 55 through the retirement years, largely due to the impact of the public pension system, the agency said. However, workers in the top 20% of the income distribution experienced substantial declines in income by the time they were 75.

The difference in the after-tax, after-transfer family income between two ages, in this case 55 and 75, is called the “income replacement rate.” The study found that on average, the higher the disposable income at 55, the lower the portion of income that was replaced in retirement.

The richest workers replaced about 70% of their income during their 70s. These wealthier workers had an average after-tax family income of $90,000 (for a family of two) by time they reached 75. About 40% of this income came from private pensions or RRSPs, 28% from investment and capital gains, and about 18% from public pensions or old-age security, the study showed.

At the other end of the spectrum, the poorest workers maintained roughly 100% of their disposable income, with an average after-tax family income of about $30,000, with 60% of it from public pension plans.

The study also examined what types of pre-retirement income were associated with high or low-income replacement rates. In early retirement years, at 65, high replacement rates were brought on by access to earnings and income from investments and capital gains. Together, they accounted for 90% of the difference in income at 65 between workers with low or high replacement rates.