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Early Retirement, Social Security, and Well-Being in Germany

Early Retirement, Social Security, and Well-Being in Germany

Chapter:
(p.173) 5 Early Retirement, Social Security, and Well-Being in Germany
Source:
Developments in the Economics of Aging
Author(s):
Axel Börsch-SupanHendrik Jürges
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226903361.003.0006

This chapter examines long-term development in subjective well-being or overall life satisfaction before and after retirement. Several hypotheses are considered: (1) early retirees suffer from retirement, compared with later retirees, because they are more likely to have been forced out of jobs involuntarily, or by declining health; (2) early retirees benefit from retirement, compared with normal retirees, because they can make use of generous early retirement incentives not available to those who may retire later; or (3) there is no difference between early and normal retirement because both types of individuals have chosen retirement optimally. The study finds that at ages younger than sixty, those who are retired are on average much less happy than those who are working. The difference is mainly due to a composition effect, as these early retirees are generally covered by disability pensions.

Keywords:   well-being, life satisfaction, retirement, retirement behavior, retirees, disability pensions, Germany

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