A model for determining early retirement incentives (Q1819880)

The salary savings resulting from the early retirement of an employee and his replacement by a less highly paid employee are analysed. Results are presented for two special cases. Firstly, the case is considered where pre-retirement terminations can be neglected. Secondly, the case is considered where termination rates are so high that the probability of a new entrant reaching retirement is small enough to be neglected. The results should be of assistance in solving actual problems, and a numerical example is given.