A person’s purchasing power is calculated on the basis of the disposable household income, i.e. the collective gross income of all household members less paid income transfers, social contributions and taxes. The amount is adjusted for size and composition of the household. This so-called standardised disposable income or purchasing power is subsequently attributed to each household member.
In the year when a person reaches the age of 65, the composition of their income changes considerably, because from their 65th birthday onwards, they will receive AOW and often an additional pension. In order to properly gauge the effect, purchasing power is defined as the percentage change of purchasing power in the year before and after a person turns 65. The calculation of the change in purchasing power is based on the collective income changes of the persons participating in the Income Panel Survey who reached the age of 65 in the years 2001, 2002, 2003 or 2004.
For persons who turned 65 in 2001, income changes have been calculated for the years 2000 and 2003. For persons who turned 65 in 2002, income data of 2001 and 2003 have been used and for persons turning 65 in 2003, income data from 2002 and 2004 were used. For those who turned 65 in 2004, the changes have been calculated on the basis of income data over 2003 and provisional income data over 2005. Figures have been adjusted for general purchasing power.