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Who is saving privately for retirement and how much? New evidence for Germany

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  • Metzger, Christoph
Abstract
Due to demographic change the replacement rates of the German statutory pension scheme will decrease over the next decades. Voluntary savings for retirement will therefore gain more and more relevance in order to maintain one's standard of living during retirement. This article examines the savings behavior for retirement on an individual level in Germany. As a first step the decision to save at all is analyzed, showing that the main determinants for saving are personal income as well as the disposable household income. Furthermore migrants and individuals living in the Eastern part of Germany turn out to be less likely to save additionally privately for retirement. In a second step the chosen gross saving rates are analyzed using a Tobit, a lognormal hurdle model and a Type II Tobit Model. The results suggest that the decisions to save at all and about the saving rate are independent of each other leading to a loss of information if only a standard Tobit model is used. For example personal income increases the probability to save for retirement but decreases the resulting saving rate. Modelling both decisions separately therefore leads to a better understanding of the determinants of saving for old-age.

Suggested Citation

  • Metzger, Christoph, 2015. "Who is saving privately for retirement and how much? New evidence for Germany," FZG Discussion Papers 57, University of Freiburg, Research Center for Generational Contracts (FZG).
    • Handle: RePEc:zbw:fzgdps:57
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    References listed on IDEAS

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    Cited by:

    1. Metzger, Christoph, 2018. "Intra-household allocation of non-mandatory retirement savings," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 77-87.
    2. Marta Pascual-Sáez & David Cantarero-Prieto & María González-Diego, 2018. "Testing the effect of population ageing on national saving rates: panel data evidence from Europe," Working Papers. Collection B: Regional and sectoral economics 1803, Universidade de Vigo, GEN - Governance and Economics research Network.
    3. Zarul Khaliff Kamal* & Siti Mardhiah Isa & Ros Idayuwati Alaudin & Noriszura Ismail, 2018. "Adequacy of Retirement Wealth in Malaysia: Spending Behaviour Analysis," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 429-435:6.
    4. Xiaobo Xu & Jiali Fang & Martin Young & Liping Zou, 2024. "The impact of post‐retirement financial market participation on retirement income sufficiency in Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 903-939, March.
    5. Christina E. Bannier & Dennis Sinzig, 2018. "Finanzwissen und Vorsorgesparverhalten [Financial literacy and savings behavior]," Schmalenbach Journal of Business Research, Springer, vol. 70(3), pages 243-275, August.

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    More about this item

    Keywords

    savings; retirement; life-cycle; two-part model; tobit; exponential type II tobit;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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