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Population aging, social security design, and early retirement
Journal of Institutional and Theoretical Economics : JITE = Zeitschrift Fur Die Gesamte Staatswissenschaft
|December 1, 1992
Summary
Industrialized nations face strained social security systems due to aging populations. Actuarially unfair social security designs in the US and Germany encourage earlier retirement, worsening this trend.
Area of Science:
- Economics
- Demography
- Public Policy
Background:
- Industrialized nations face demographic shifts with aging populations.
- Social security systems are strained by the increasing ratio of elderly to employed individuals.
- Early retirement trends exacerbate the financial pressure on social security.
Purpose of the Study:
- To analyze the impact of social security system design on retirement decisions.
- To present cross-national evidence on retirement trends.
- To investigate the role of actuarial fairness in social security in early retirement.
Main Methods:
- Cross-national empirical analysis of retirement data.
- Option value analysis of the retirement decision-making process.
- Examination of social security system designs in the United States and Germany.
Main Results:
- Social security systems in industrialized countries are under significant strain from population aging.
- The ratio of elderly to employed persons is projected to increase substantially by 2030.
- Actuarially unfair social security designs, particularly in Germany, are linked to earlier retirement ages.
Conclusions:
- The design of social security systems significantly influences retirement decisions.
- Actuarial unfairness in social security contributes to the trend of earlier retirement.
- Policy reforms are needed to address the sustainability of social security systems facing demographic challenges.