Our extensive work on retirement policy covers the many ways the aging of America will trigger changes in how we work, retire, and spend federal resources.
The number of Americans age 65 and over will rise from about 13 percent in 2008 to 20 percent by 2040. The recession dealt a heavy blow to retirement accounts, leaving many older adults worried about their retirement security. Read more.
Rapid growth in the earnings of the highest earners over the past 25 years has contributed to strains on Social Security’s finances and made projecting lifetime earnings on a year-by-year basis-already a complicated technical problem-even more challenging. This project uses descriptive techniques and high-quality administrative data matched to household surveys to explore questions about the changing earnings distribution. We describe high earners' characteristics, both at a point in time and over longer periods (from 1983 through 2010). We then evaluate how well SSA's MINT7 model projects inequality in the earnings distribution and the long-term characteristics of earnings paths.
These tables update to 2013 previous estimates of the lifetime value of Social Security and Medicare benefits and taxes for typical workers in different generations at various earning levels based on new estimates of the Social Security Actuary. The "lifetime value of taxes" is based upon the value of accumulated taxes, as if those taxes were put into an account that earned a 2 percent real rate of return (that is, 2 percent plus inflation). The "lifetime value of benefits" represents the amount needed in an account (also earning a 2 percent real interest rate) to pay for those benefits. All amounts are presented in constant 2013 dollars.
This brief considers how Social Security’s many benefit and tax features have redistributed across groups over time. Using Current Population Survey data from 1970 through 1994 and microsimulation projections from the Urban Institute’s DYNASIM3 model, we find that for many decades, Social Security redistributed from blacks, Hispanics, and other people of color, to whites. These transfers will likely to continue in future decades. Our findings suggest that future reforms that place the burden of Social Security reform solely on younger, more diverse generations may have undesired distributional consequences if the aim of the program is to provide greater relative protections to more vulnerable groups.
Richard Johnson describes the key challenges to retirement security in this testimony to the U.S. Senate's Special Committee on Aging. Although median retirement incomes will continue to rise in inflation-adjusted terms for generations retiring through the 2030s, increasing shares of Americans will see their living standards fall as they enter retirement because retirement incomes are not keeping pace with earnings. High out-of-pocket medical and especially long-term care costs pose the greatest threat to older Americans’ economic security. Income inequality is also growing at older ages and many seniors have difficulty turning retirement account balances into lifelong income.
In his testimony before the federal Commission on Long-Term Care, Richard Johnson reports that most older adults who receive Medicaid-financed nursing home care have low incomes and very little wealth, both while on the program and for at least a decade before entering a nursing home. These results suggest that efforts to promote individual saving for long-term care may not move many people off Medicaid or reduce program costs because most Medicaid nursing home residents haven’t had the means to save much.