Fact Sheet Distributional Effects of Alternative Social Security Reforms: Details Matter
The Retirement Policy Program
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Social Security's current path is unsustainable. With average life spans increasing, the working-age population is not growing fast enough to support the growing number of retirees at current benefit levels and tax rates. Benefit cuts, revenue enhancements, or some combination could return the system to balance. The arithmetic is fairly straightforward, but impacts on workers and retirees depend crucially on design details. Using a microsimulation model, we show distributional effects of illustrative benefit-cut and revenue-enhancement options on retirees. Results show that impacts differ greatly for workers in different generations and age groups and with different lifetime earnings.
Research Areas Aging and retirement
Tags Social Security Pensions Retirement policy
Policy Centers Income and Benefits Policy Center