Aging in Germany and the United States [electronic resource] : international comparisons /
A. Borsch-Supan.
Cambridge, Massachusetts, National Bureau of Economic Research [NBER], 1993.
60, [21] p.
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Cambridge, Massachusetts, National Bureau of Economic Research [NBER], 1993.
Licensed for access by U. of T. users.
The microeconomic decisions of the an aging population has affected the economies in the United States and Germany through retirement, savings, and living arrangements. In Germany, elderly households headed by persons aged 60 years and older will probably increase from 21% in 1980 to 37% in 2030. The number of extremely old people (aged 85 years and older) will double. Aging has been a result of lower fertility and increased life expectancy. The old age dependency ratio in Germany is expected to increase from 0.22 to 0.44 in 2030 and then decline. There will be an increase from 0.48 retirees per worker to about 0.91 retirees per worker. 95% of all workers in the US are insured by Social Security. In Germany, uncovered workers comprise 8.9% of the labor force of self-employed persons and 5.6% with very small incomes. 25% of German workers are subject to mandatory retirement and restricted part-time employment. Private pensions in Germany are not a significant source of support for the elderly: 3% of income for the German elderly versus 15% of income for the American elderly in 1984. German public pensions, however, are at a higher rate: about 33% higher than the American rate. Taxation of income received during retirement differs between the two countries. Employment of the elderly is lower in Germany, although both countries experienced a decline in elderly employment over time. US retirement has been more gradual and wider in the span of ages. The probability of being retired is closely determined by economic incentives. The implications for policy are that the 1992 German social security reform act would likely contribute to greater bunching at specific ages rather than the preferred gradual adjustment of replacement rates. Political power shifts will occur in Germany about the year 2020, when pensioners and workers who will soon retire will dominate voting and could determine the rate of social security taxes the younger generation will pay. Savings patterns between the two countries are also different. Incentives are provided in Germany to encourage savings among lower income groups. Capital gains are taxed in Germany only if earnings are speculative and financial assets sold within 6 months. German health insurance for the elderly is comprehensive and all inclusive. American age-wealth has been slowly declining, and German age-wealth has peaked at age 60-64 years. Rental housing is the choice of housing in Germany, compared to home-ownership in the US.
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