Arbeitspapier

Early retirement in Germany: Loss of income and lifetime?

The public pension system in Germany allows early retirement albeit at the cost of pension deductions. Deductions are calculated under the assumption that life expectancy is independent of the age of retirement and apply equally for men and women. The 'fair' amount of deductions is currently debated, the general feeling being that they are too low. In this paper we show that remaining lifetime and thus the perpetuity period vary with the age of retirement. In a survival analysis using micro data from the German Pension Insurance, we find that remaining life expectancy of men at age 65 receiving old-age pensions with age 60 to 66 is up to 1.9 years higher if retirement occurred later. For women, instead, life expectancy is almost independent of retirement age. Extending the analysis to invalidity pensioners (they receive pensions before the age of 60), we find that men and women reaching the age of 65 have a more than 3 years lower remaining life expectancy than old-age pensioners on average. Many other variables, like residence (West and East Germany), lifetime wage income and number of children are considered, too. In a simple model we finally calculate and compare actuarial deductions under the alternative assumptions of constant and age-of-retirement dependent life expectancy. The main conclusion is that deductions currently in law are too high for very early retirees (below age 63) and too low for all others.

Sprache
Englisch

Erschienen in
Series: Thünen-Series of Applied Economic Theory - Working Paper ; No. 85

Klassifikation
Wirtschaft
Social Security and Public Pensions
Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
Retirement; Retirement Policies
Thema
Life expectancy
retirement age
early retirement
pension deductions
Flexible Altersgrenze
Gesetzliche Rentenversicherung
Sterblichkeit
Geschlecht
Rentenfinanzierung

Ereignis
Geistige Schöpfung
(wer)
Kühntopf, Stephan
Tivig, Thusnelda
Ereignis
Veröffentlichung
(wer)
Universität Rostock, Institut für Volkswirtschaftslehre
(wo)
Rostock
(wann)
2008

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Kühntopf, Stephan
  • Tivig, Thusnelda
  • Universität Rostock, Institut für Volkswirtschaftslehre

Entstanden

  • 2008

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