Employment after Retirement in Germany

Increasing the employment rate of older citizens is one of the major remedies to mitigate the negative effect caused by the shift in the population structure which affects most OECD countries in the coming decades. Germany has experienced a steep increase in the labor force participation rates of older workers. However, despite this major behavioral change, not much is known about people’s motives to expand their working live. This paper sheds some light on different reasons for remaining in the workforce beyond retirement. Looking at workers and retirees alike by using the SAVE dataset as a representative cross-section of German households allows for an ex-ante as well as an ex-post perspective on this topic. From an ex-ante perspective, the active workforce shows a trisection with one third aiming to work after retiring, one third aiming to ultimately quit work when retiring, and one third that is still undecided. When looking at the motives of those who claim to remain working after retirement, one half states financial needs as the main reason whereas the other half declares that they simply enjoy their work. This picture changes when looking at the ex-post perspective, where around 15.6 % of the respondents still at least occasionally work after retirement. At this moment, positive associations with employment, like enjoying work and being of use for the society, outmatch the pure monetary reasons to remain in the workforce by two to one. These finding have the strong policy implication that pension regulations should facilitate the combination of work and retirement. This project is currently evaluated using the latest SAVE wave of 2013.