The Effect of a Longer Working Career on Retirement Income

Austrian pension law fixes the mandatory retirement age at 65 and aims at a gross income replacement rate of 80 percent of the average earned income. At the same time, the corridor pension allows individuals to choose their retirement date between the ages of 62 and 68.

Incentives were introduced for later retirement by pension reductions for earlier retirement and supplements for later retirement. In addition, reduced social security contributions increase the net earned income of older workers.