The Effect of Increasing the Early Retirement Age on Savings Behavior Before Retirement

45 Pages Posted: 18 Nov 2019

See all articles by Stefan Etgeton

Stefan Etgeton

German Federal Ministry of Labor and Social Affairs - BMAS

Björn Fischer

European Central Bank (ECB)

Han Ye

University of Mannheim; IZA

Abstract

Facing a reduction in pension generosity, individuals can compensate the loss by working longer or saving more. This paper shows that the impact of changes in pension generosity on saving crucially depends on the possibility of prolonging future employment. Exploiting across cohort variation in expected pension wealth induced by a 3-year lift in early retirement age for women born after 1951 in Germany, we show evidence of a reduction in private savings rate and an increase in leisure consumptions in case of strong responses in future labor earnings.

Keywords: pension reform, early retirement age, savings, pension wealth

JEL Classification: D14, J14, J26

Suggested Citation

Etgeton, Stefan and Fischer, Björn and Ye, Han, The Effect of Increasing the Early Retirement Age on Savings Behavior Before Retirement. IZA Discussion Paper No. 12744, Available at SSRN: https://ssrn.com/abstract=3488171 or http://dx.doi.org/10.2139/ssrn.3488171

Stefan Etgeton (Contact Author)

German Federal Ministry of Labor and Social Affairs - BMAS ( email )

Germany

Björn Fischer

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Han Ye

University of Mannheim ( email )

L 7, 3-5
Mannheim, 68161
Germany

IZA ( email )

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