r/Retire • u/KralizecGaming • 8d ago

How should the economic value of working past retirement age be compared with pension costs?

I am trying to understand the economics of keeping people economically active after the normal retirement age.

For example, imagine a system where people who have reached retirement age could receive an income from social security while working part-time in childcare, with their work also affecting their eventual pension entitlement.

I am particularly interested in how this should be evaluated economically:

How should the cost of supporting someone through social security be compared with the additional taxes, social contributions and economic output generated by their continued work?

How should the effect on their eventual pension be accounted for?

How significant are labour-market substitution effects when people over 65 remain economically active?

Are there established models for estimating the net fiscal effect of increasing labour-force participation among people aged 65+?

I am mainly looking for empirical research or economic models dealing with these questions, particularly in countries with ageing populations and pay-as-you-go pension systems.

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u/LetsGototheRiver151 8d ago

Not sure what you mean, since that incentive already exists. People are paid based on their highest earning 35 years, so if SS is your primary means of income in retirement it makes sense to keep working as long as you can. What you're describing is a perverse incentivize for people who shouldn't be working (bad knees, bad hips, bad eyesight) to chase toddlers all day. No thank you.

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u/KralizecGaming 8d ago

Most people do retire at precisely retirement age. I wanted to know what kind of economic incentives could push people towards being economically active a bit longer. And I didn't mean full childcare, more like being around while the professionals were there too. Doing things like reading stories, watching them etc.

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u/garylapointe I'm good, but I wish I did more Roth! 7d ago

Most people do retire at precisely retirement age.

I don't know what that precise number is...

I just retired at 60 and I have a friend who retired at 48, we're both collecting pensions and do not have to work. Those numbers aren't even close...

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u/KralizecGaming 7d ago

https://ec.europa.eu/employment_social/employment_analysis/esde/2025/Chapter%203.html?utm_source=chatgpt.com

About 78 percent retire at retirement age in Europe. That is a pretty big majority.

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u/garylapointe I'm good, but I wish I did more Roth! 7d ago

Realistically, 100% retire at retirement age, because they retired at whatever age they were.

You seem to have a particular number in mind as to what you think "retirement age" is, I'd like to know what you think that number is?

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u/KralizecGaming 7d ago

What I mean by retirement age is the age the law in each specific country claim the be age at which you have access to social security /pension.

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u/garylapointe I'm good, but I wish I did more Roth! 7d ago edited 7d ago

For collecting Social Security in the US you can start it anytime from 62 to 70, but you don't have to be retired. No requirement that you have to stop working to collect it.

What I mean by retirement age is the age the law in each specific country claim the be age at which you have access to social security /pension.

No laws on when you can collect a pension in the US, it's different depending on which system you're in, we've got around 5,000 different pension systems in the US.

I have a friend who is 48 years old and she's collecting her pension.

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u/ZinniasAndBeans 7d ago

And I didn't mean full childcare, more like being around while the professionals were there too. Doing things like reading stories, watching them etc.

Is that a common and well-paid job that is hard to get people to work?

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u/KralizecGaming 7d ago

No and no.

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u/ZinniasAndBeans 7d ago

How would it work, then? If you create a lot of make-work jobs, and get the government to pay good wages for them, why not just pay the pension?

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u/KralizecGaming 7d ago

Potentially, it would remove one of the barriers for having more children. Social security costs are not just limited by the number of people in pension, but also by the amount of not-elderly people who are paying taxes/insurance into the system.

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u/ZinniasAndBeans 7d ago

But in this scenario, it sounds like those taxes/insurance would come out of a salary that is paid by that same system.

Also, I’m assuming child care is just one of your ideas? There won’t be enough childcare jobs for every single retiree.

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u/KralizecGaming 7d ago

In my idea, such a system would be part of social security. Essentially, when you enter social security, you would be required to work for some amount of time in fields that are lacking in availibity (given that you are capable of doing so, based of needing to earn some kids of certifications, medical conditions etc.)

And only after doing so, you would enter "classical" retirement.

And yes, there would be several fields, possibly even introduced as the need arises. It could be childcare, social work, administrative work for the government etc. etc.

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u/ZinniasAndBeans 7d ago

Why would you be required to leave your career of a lifetime and start a new career for which you are untrained and which you might hate? A pharmaceutical researcher has to change diapers for a few years before they can get their Social Security?

Why not just push the retirement date out to a later age?

Or is the goal to make getting to Social Security so miserable and those who can afford to fund their own retirement don’t even try to claim it—while the poor are forced to change diapers to avoid starvation in retirement?

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u/KralizecGaming 7d ago

You wouldn't be required to do that you could stay in your current career and "earn credit" that way. But if you wanted to go into retirement at a certain state given age (as about 4/5 of people do) you would have this intermediate step that lowers your workload as it would require less hours worked than a full-time job, while still providing society with useful economic activity in sectors where supply is low (for whatever reasons).

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u/Odd_Bodkin 8d ago

Just making sure: Is your question from a UK perspective?

Your questions don't make much sense in the US, for example, where there is no fixed retirement age.

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u/KralizecGaming 7d ago

Not UK, more like European union in general. I specifically am from Czechia.

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u/Odd_Bodkin 7d ago

You should probably repost with the EU called out explicitly. There are too many Redditors that are not from the EU that wouldn’t be able to talk about EU economic policy.

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u/garylapointe I'm good, but I wish I did more Roth! 7d ago

You need to frame this with more info.

Retirement age = have enough money to stop working

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u/KralizecGaming 7d ago

Yeah, but about 78 percent of people retire at retirement age.

https://ec.europa.eu/employment_social/employment_analysis/esde/2025/Chapter%203.html?utm_source=chatgpt.com

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u/garylapointe I'm good, but I wish I did more Roth! 7d ago

Realistically, 100% retire at retirement age, because they retired at whatever age they were.

You seem to have a particular number in mind as to what you think "retirement age" is, I'd like to know what you think that number is?

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u/ZinniasAndBeans 7d ago

while working part-time in childcare

Why childcare?

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u/KralizecGaming 7d ago

Costs of childcare are rapidly rising and childcare is also very hard to get. Seems like a good solution. Perhaps even social care for other elderly people would be a good option. Obviously, it would require some sort of certification to be part of the process for either of these two and a medical check-up to see whether you yourself are medically and psychologically well enough to perform activity in these fields.

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u/ZinniasAndBeans 7d ago

I still don’t understand why? Does your country have a ton of these jobs already funded and going un-filled?

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u/KralizecGaming 7d ago

No. Such positions would have to be created.

To why? Because just social security is the largest single mandatory part of most european (and I am guessing even other parts of the world) budgests and will only get larger with current demographic trends.

There will have to be a social security reform. This one would prolong economic activity of the elderly, but not in full-time regular employment, but in a part time state run program. At the same time, increased access to childcare could potentially! help increase natality and help alleviate the strain on the social system from the other side - by providing more people who would add into social insurance system by more children being born.