Micro-Modeling of Retirement in Belgium
Micro-Modeling of Retirement in Belgium
The widespread use of various early retirement programs makes Belgium the country with the lowest average retirement age in the Western world, which is approximately fifty-seven years old for men. This chapter, which studies the incentives pushing people toward retiring early, explicitly models the incentive structure built into the various public retirement and early retirement systems. First, it computes indicators of benefit entitlement, such as social security wealth, and then defines several different incentive measures based on the notion of social security wealth. In a third step, the empirical estimation of microeconometric probit and option value models is performed. From an exceptionally rich and broad database, an accurate measure of all individuals' pension wealth was determined, as well as of the implicit tax rates the elderly workers face in case of delayed retirement.
Keywords: early retirement programs, retirement age, incentives, public retirement, retirement benefits, pension wealth, tax rates, elderly workers
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