Maintaining One's Living Standard at Old Age: What Does that Mean? Evidence Using Panel Data from Germany

31 Pages Posted: 8 May 2013

See all articles by Christian Dudel

Christian Dudel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Demographic Research; University of Bochum - Faculty of Social Science

Notburga Ott

Ruhr Universität Bochum

Martin Werding

Ruhr Universität Bochum; CESifo (Center for Economic Studies and Ifo Institute); CESifo (Center for Economic Studies and Ifo Institute) - Social Policy and Labour Markets

Date Written: April 30, 2013

Abstract

How much retirement income is needed in order to maintain one’s living standard at old age? As it is difficult to find a firm basis for an empirical treatment of this question, we employ a novel approach to assessing an adequate replacement rate vis-à-vis income in the pre-retirement period. We subject indications regarding satisfaction with current income as collected in the German Socio-Economic Panel (GSOEP) to longitudinal analyses, using linear fixed-effects models and fixed-effects ordered logit models as our main analytical tools. We obtain a required net replacement rate of about 87% for the year of entry into retirement as a rather robust result, while replacement rates keeping the living standard unchanged may slightly decline over the retirement period.

Keywords: retirement, living standard, replacement rate, pensions, saving, satisfaction

JEL Classification: D100, D910, H550, J320

Suggested Citation

Dudel, Christian and Ott, Notburga and Werding, Martin, Maintaining One's Living Standard at Old Age: What Does that Mean? Evidence Using Panel Data from Germany (April 30, 2013). CESifo Working Paper Series No. 4223. Available at SSRN: https://ssrn.com/abstract=2261658

Christian Dudel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Demographic Research ( email )

Doberaner Str. 114
Rostock 18057, 53113
Germany

University of Bochum - Faculty of Social Science ( email )

Germany

Notburga Ott

Ruhr Universität Bochum ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Martin Werding (Contact Author)

Ruhr Universität Bochum ( email )

Room GC 04/312
D-44780 Bochum, 44780
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschingerstr. 5
81679 Munich
Germany

CESifo (Center for Economic Studies and Ifo Institute) - Social Policy and Labour Markets ( email )

Munich, 81879
Germany

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