Research by Author & Topic

Publications by C. Eugene Steuerle on Retirement/Pensions

Despite decades of significant tax subsidies for pensions and retirement accounts, most Americans retire with little or no pension saving. This paper suggests that it is possible to create a "Super Simple" saving plan that would provide a basic, low-cost, easily administrable plan with the potential to increase significantly the retirement assets available to moderate- and middle-income individuals. This plan follows the lead of a new system about to be implemented in the United Kingdom, which features automatic contribution for employees who do not opt out, a significant government match, and simplification of existing rules amongst other elements.

In this Baltimore Sun commentary, senior fellow Eugene Steuerle argues that the democratic process is imperiled by retirement, health, and taxation promises that will be very difficult to keep.

Although Social Security does not currently guarantee low-wage workers a minimum retirement benefit, several proposed reforms include benefit minimums. Our analysis suggests that such policies could help reduce poverty among older adults. However, the way the minimums are designed could affect the extent to which poverty rates decline. Using the Urban Institute's dynamic microsimulation model, we examine five alternative benefit options. Several lessons emerge from these simulations that could help guide designers of Social Security proposals. Understanding how a well-designed minimum benefit could reduce poverty is especially important now, when the program's long-term fiscal deficit threatens future benefit reductions.

Despite Social Security's success at bolstering retirement security, many older Americans remain mired in poverty. Because Social Security does not guarantee a minimum benefit, many long-service, low-wage workers receive benefits that leave them below the poverty line. African Americans, Hispanics, and unmarried women are especially vulnerable. Although productivity gains are likely to reduce old-age poverty over time, Social Security's long-term financing problem makes future benefit cuts likely. This analysis explores two potential minimum-benefit designs and shows that an effective minimum benefit could help protect the highest-risk groups.

Social Security's projected financial shortfall has spurred discussions about increasing the age at which workers can first receive retirement benefits. This brief examines the future distributional impacts of raising the retirement age by about three years. Raising the retirement age hits lower-income workers less hard than other groups because the disability program provides some protection. However, it still increases poverty rates. Combining the retirement age change with an enhanced minimum benefit increases lifetime benefits for the lowest earners and substantially cuts the Social Security deficit without significantly increasing poverty rates.

In light of Social Security reform proposals that include provisions for minimum benefits, this paper considers the redistributive purpose of Social Security and whether a minimum benefit may reduce need among aged and disabled people more equitably or efficiently than current law structures. We then examine several minimum benefit designs. We find that minimum benefits could help reduce poverty among the aged substantially, even in the context of benefit reductions to improve the program's long-term fiscal deficit. However, trade-offs exist; generous minimums could reduce Social Security’s earnings relationship, which has helped the program garner strong political support.

(Brief) Workers who delay retirement can save more and contribute more to the economy. Using the Urban Institute's Dynamic Simulation of Income model (DYNASIM3), this brief shows that someone who works an extra five years could increase retirement spending by more than half. Also, work-inducing reforms—rather than reforms that simply reduce benefits—help close the Social Security funding gap.

Encouraging work at older ages is a crucial policy goal for an aging society, but many features of the benefits and tax system discourage work. This study computes the implicit tax rate on work at older ages, broadly defined to include standard income and payroll taxes as well as changes in future Social Security benefits, employer-provided pension benefits, and health benefits associated with an additional year of employment. The results show that the implicit tax rate on work increases rapidly with age, rising from 14 percent at age 55 for a typical man to nearly 50 percent at age 70.

Assets are like ladders that can place low- and moderate-income (LMI) families in reach of opportunity. Moreover, increased saving benefits not just households but the economy overall. If every household with less than the median net worth saved an additional $1,000, it would add $56 billion to the economy. However, current U.S. savings policy directs the lion's share of $300 billion in annual subsidies for saving to households earning $50,000 and above who would likely save in any case--and still, the national saving rate fell to zero in 2005. This paper addresses barriers to saving among LMI households, such as asset tests in welfare and education policies and the targeting of subsidies to those households in the highest tax brackets.

Private and public retirement systems discourage work at older ages. People now retire earlier than they did 50 years ago, even though they are now healthier and work in less physical jobs. Unless older adults work more, the aging of the population will reduce the share of adults that is employed, slow the rate of growth in national output, and strain government's ability to pay for retirement programs and other public services. This report describes how changes to private pensions, Social Security, Medicare, and tax and discrimination law can promote work at older ages.