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The financial implications of working longer: An Application of a Micro-Economic Model of Retirement in Belgium

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  • Gijs Dekkers

    () (Federal Planning Bureau)

Abstract

In this paper, the costs and benefits associated with postponing retirement are simulated in a standard simulation model for Belgium, using the approach of Stock and Wise (1990). Unlike earlier microsimulation-based applications of this approach, such as Gruber and Wise (1999, 2004), this model does not take a representative sample as the point of departure, but simulates the costs and benefits of postponing retirement for four fictitious employees, representing male and female white- and blue-collar workers. While confirming conclusions drawn by other authors, this model allows for the separation of specific retirement schemes, and of the effect of different fiscal regimes for those retired and working. It is shown that differences between retirement schemes show up in differences in replacement rates and by whether or not the retirement benefit is a function of career length. Furthermore, advantageous fiscal regulations for the retired have a strong impact on the implicit costs of postponing retirement.

Suggested Citation

  • Gijs Dekkers, 2007. "The financial implications of working longer: An Application of a Micro-Economic Model of Retirement in Belgium," International Journal of Microsimulation, International Microsimulation Association, vol. 1(1), pages 10-25.
  • Handle: RePEc:ijm:journl:v:1:y:2007:i:1:p:10-25
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    File URL: http://ima.natsem.canberra.edu.au/IJM/V1_1/IJM_1_1_3.pdf
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    References listed on IDEAS

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    1. Axel Borsch-Supan & Barbara Berkel, 2003. "Pension Reform in Germany: The Impact on Retirement Decisions," NBER Working Papers 9913, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jan-Maarten van Sonsbeek & j.m.van.sonsbeek@vu.nl, 2011. "Micro simulations on the effects of ageing-related policy measures: The Social Affairs Department of the Netherlands Ageing and Pensions Model," International Journal of Microsimulation, International Microsimulation Association, vol. 4(1), pages 72-99.
    2. Paul Williamson, 2007. "The role of the International Journal of Microsimulation," International Journal of Microsimulation, International Microsimulation Association, vol. 1(1), pages 1-2.

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