Retirement expectations in Germany – towards rising social inequality?

Abstract

In the last 20 years, German policy makers have reformed the pension system and the labor market with the aim of prolonging working life. As a consequence, older workers’ employment rate and average retirement age rose. In addition to the actual behavior of today’s retiree cohorts, the reforms also influence the expected retirement age of future pensioners, the development of which will be investigated in this paper, arguing that they have adapted to the reforms and increased their expected retirement age. The analyses are based on data from the SOEP and DEAS survey and results show an increase of the expected retirement age. However, while high-skilled workers both want and expect to retire late, low-skilled workers prefer to retire early but expect that they have to work longer in order to ensure a reasonable pension. This finding hints at rising social inequality in the transition from work to retirement.