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Introducing flexible retirement : a dynamic model

Author

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  • András Simonovits

    (ELKH KRTK KTI and BUT MI, Budapest, Hungary)

Abstract

Typically economists arguing for flexible (or variable) retirement age, but they rely on steady state analysis. In this paper we consider the replacement of a mandatory retirement system with a flexible one in real time. We show that even if early retirement is duly punished, diminishing the effective retirement age by 1 year raises the first year's and the total expenditures during transition by 8% and 70% of the original annual expenditure, respectively.

Suggested Citation

  • András Simonovits, 2021. "Introducing flexible retirement : a dynamic model," CERS-IE WORKING PAPERS 2109, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:2109
    as

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    References listed on IDEAS

    as
    1. Peter A. Diamond, 2005. "Taxation, Incomplete Markets, and Social Security," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262541823, December.
    2. András Simonovits, 2003. "Modeling Pension Systems," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59769-3, December.
    3. András Simonovits, 2003. "Modeling Pension Systems," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-4039-3845-9, December.
    4. Robert Holzmann & Edward Palmer & Robert Palacios & Stefano Sacchi, 2020. "Progress and Challenges of Nonfinancial Defined Contribution Pension Schemes," World Bank Publications - Books, The World Bank Group, number 32439, December.
    5. Jonathan Gruber & David A. Wise, 1999. "Introduction to "Social Security and Retirement around the World"," NBER Chapters, in: Social Security and Retirement around the World, pages 1-35, National Bureau of Economic Research, Inc.
    6. Andras Simonovits, 2020. "Indexing public pensions in progress to wages or prices," CERS-IE WORKING PAPERS 2015, Institute of Economics, Centre for Economic and Regional Studies.
    7. Hugo Benítez-Silva & Berna Demiralp & Zhen Liu, 2009. "Social Security Literacy and Retirement Well-Being," Working Papers wp210, University of Michigan, Michigan Retirement Research Center.
    8. Peter Eso & Andras Siminovits, 2002. "Designing Optimal Benefit Rules for Flexible Retirement," Discussion Papers 1353, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Barr, Nicholas & Diamond, Peter, 2008. "Reforming Pensions: Principles and Policy Choices," OUP Catalogue, Oxford University Press, number 9780195311303, Decembrie.
    10. András Simonovits, 2020. "Indexing Public Pensions in Progress to Wages or Prices," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 12(2), pages 171-194, June.
    11. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, March.
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    Cited by:

    1. András Simonovits, 2023. "A rational pension reform package: Hungary, 2025," CERS-IE WORKING PAPERS 2324, Institute of Economics, Centre for Economic and Regional Studies.

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    More about this item

    Keywords

    retirement age; flexible retirement age; variable retirement age; transition cost;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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