Introducing Flexible Retirement: A Dynamic Model

Mature market economies steadily raise full-benefit retirement ages and add flexible (or variable) age: early/late is punished/rewarded to neutralize the budgetary impact of free choice within wide age limits. New EU member states also ages, but typically restrict downward flexibility, conditioning it on long enough length contribution (e.g., Czechia) sometimes even forsake deduction (Females40 scheme in Hungary). In this paper, we shall study costs removing restrictions flexibility. our dynamic model, show that if early duly punished, diminishing effective by 1 year raises first year's total expenditures during transition 8% 70% original annual expenditures, respectively.