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Ruth Schüler IW-Trends No. 1 13. April 2023 How Couples Retire in Germany

For the statutory pension scheme to be financed sustainably on its current pay-as-you-go basis, as many people as possible need to stay at work until the standard retirement age.

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How Couples Retire in Germany
Ruth Schüler IW-Trends No. 1 13. April 2023

How Couples Retire in Germany

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German Economic Institute (IW) German Economic Institute (IW)

For the statutory pension scheme to be financed sustainably on its current pay-as-you-go basis, as many people as possible need to stay at work until the standard retirement age.

In economic theory, retirement is described as an individual decision in which the opportunity costs of leisure time are weighed against the anticipated retirement income. How the household context influences the decision to retire has so far received little attention, not least due to a lack of data. In the present study, data from the Socio-Economic Panel and the German Pension Insurance Fund are used to examine the extent to which couples coordinate their retirement plans and take a joint decision. Our analysis shows that joint retirement occurs less often than it is desired. In particular, a change in behaviour can be observed in the cohort of pensioners born in or after 1947, for whom the statutory retirement age has been gradually rising. In the preceding pensioner cohort, the older member of the couple tended to work until closer to the standard retirement age than their younger partner. For the pensioner cohorts born after 1947, the opposite is the case: the younger member of the couple has tended to work until closer to the standard retirement age than their older partner. An econometric analysis of two reforms, the increase in the statutory retirement age and the recent introduction of a full pension two years before the standard retirement age for those with a particularly long contribution record, shows that they are not the cause of this behaviour reversal.

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How Couples Retire in Germany
Ruth Schüler IW-Trends No. 1 13. April 2023

How Couples Retire in Germany

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German Economic Institute (IW) German Economic Institute (IW)

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A Systematic Study of Neutrality in Pension Financing and in the Burdens and Incentives for Members of the Statutory Pension Scheme
Jochen Pimpertz IW-Trends No. 4 2. January 2023

„Actuarially Fair” Reductions in Early Retirees’ Pension Benefits

Calls for the reduction in state pension benefits for early retirees to reflect real insurance risks imply that early retirement need not involve any additional costs.

IW

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Michael Hüther / Jochen Pimpertz IW-Policy Paper No. 6 6. October 2022

Asset accumulation for retirement provision

The pay-as-you-go statutory pension insurance is intended to protect workers in Germany from having to rely on tax-financed assistance in old age. However, due to the ageing of society the security level of the statutory pension insurance must decrease.

IW

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