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

  • Christian Dudel
  • Notburga Ott
  • Martin Werding

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.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4223.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4223
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