Retirement Income: Level, Risk, and Substitution Among Income Components

Axel Börsch-Supan () and Anette Reil-Held ()
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Axel Börsch-Supan: Sonderforschungsbereich 504, Postal: L 13, 15, D-68131 Mannheim
Anette Reil-Held: Mannheim Research Institute for the Economics of Aging (MEA) and Sonderforschungsbereich 504, Postal: L 13,15 D-68131 Mannheim

No 97-39, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: Summary This paper looks at the sources or retirement income and how these might change in the course of population aging. It stresses four points: Retirement income exhibits a large degree of heterogeneity. While some households are overannuitized, there are still pockets of poverty in old age. This heterogeneity is likely to increase in the future. There may be substitution among five broad classes of retirement income: social security, occupational pensions, earnings, asset income, and private intergenerational transfers. In is important for social policy to understand the associated crowding out. While substitution towards private income sources may keep th level of total retirement income constant when social security income declines, the riskiness of future retirement income packages is likely to change.In spite of its importance for social policy design, there is little systematic evidence on the substitution among, and the riskiness of,alternative retirement income packages. In particular, better longitudinal data is required for fact-based policy design.

Pages: 30 pages
Date: 1997-11-23
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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