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

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  • Christian Dudel
  • Notburga Ott
  • Martin Werding

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- a-vis income in the pre-retirement period. We subject indications regarding satisfaction with current income as collected in the German Socio-Economic Panel (SOEP) 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.

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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 563.

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Length: 30 p.
Date of creation: 2013
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp563

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Keywords: Retirement; living standard; replacement rate; pensions; saving; satisfaction;

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  1. Bellemare, C. & Melenberg, B. & Soest, A.H.O. van, 2002. "Semi-parametric Models for Satisfaction with Income," Discussion Paper, Tilburg University, Center for Economic Research 2002-87, Tilburg University, Center for Economic Research.
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