Early retirement and household financial savings

Pension anticipée et épargne financière des ménages

Luc Arrondel, Jean-Brieux Delbos, Dominique Durant, Christian Pfister and Laurent Soulat
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Jean-Brieux Delbos: Banque de France - Banque de France - Banque de France
Dominique Durant: Banque de France - Banque de France - Banque de France

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Abstract: Since Feldstein's pioneering article (1974), the impact of a pension system on the level of savings has been the subject of numerous studies, with sometimes controversial results. According to the standard life-cycle hypothesis, someone who anticipates a loss in living standards upon retirement should, all else being equal, save more. This is the issue examined here. To this end, we consider that individuals anticipate their replacement rate (based on their wage profile) more satisfactorily than the amount of their pension at the time of retirement. We then study the effects of an anticipated variation in this replacement rate on household financial savings, taking into account both expected career changes and pension reforms. We use the 2012 wave of the PAT€R survey of the French population, which provides a wealth of information at the individual level on pension expectations. Our econometric estimates show that a lower (respectively, higher) expected replacement rate is significantly related to a higher (respectively, lower) financial savings rate.

Keywords: Retirement; Reform; Pension expectations; Savings; Life cycle; Retraite; Réforme; Anticipassions de pension; Epargne; Cycle de vie (search for similar items in EconPapers)
Date: 2020-11
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Published in Revue de l'OFCE, 2020, 170 (6), pp.227-259. ⟨10.3917/reof.170.0227⟩

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Working Paper: Early retirement and household financial savings (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03229960

DOI: 10.3917/reof.170.0227

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