Validating Longitudinal Earnings in Dynamic Microsimulation Models: The Role of Outliers (Research Report)Melissa M. Favreault, Owen Haaga
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.
Social Security and Medicare Taxes and Benefits over a Lifetime (Fact Sheet / Data at a Glance)C. Eugene Steuerle, Caleb Quakenbush
|Posted: November 15, 2013||Availability: HTML | PDF|
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.
Has Social Security Redistributed to Whites from People of Color? (Research Report)Caleb Quakenbush, Karen E. Smith, C. Eugene Steuerle
|Posted: November 12, 2013||Availability: HTML | PDF|
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.
Retirement Income Challenges in the Twenty-First Century (Testimony)Richard W. Johnson
|Posted: November 07, 2013||Availability: HTML | PDF|
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.
Income and Wealth of Older Adults Needing Long-Term Services and Supports (Testimony)Richard W. Johnson
|Posted: September 25, 2013||Availability: HTML | PDF|
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.
Labor Force Statistics on Older Americans, Second Quarter 2013 (Policy Briefs/Retirement Project Brief Series)Richard W. Johnson, Benjamin G. Southgate
|Posted: August 21, 2013||Availability: HTML | PDF|
This data brief reports quarterly labor force statistics for older Americans, a growing segment of the workforce. It reports labor force participation rates, unemployment rates, employment-to-population ratios, and the share of unemployed workers who have been out of work for more than six months, and compares outcomes to earlier years. Labor market outcomes did not improve much for older or younger workers in the second quarter of 2013. Older workers continue to fare better than their younger counterparts, although older unemployed adults take longer to find work.
How Did the Great Recession Affect Social Security Claiming? (Policy Briefs/Retirement Project Brief Series)Richard W. Johnson, Karen E. Smith, Owen Haaga
|Posted: July 30, 2013||Availability: HTML | PDF|
Social Security retirement claiming grew in 2009 as unemployment soared. The increase was modest, however, because unemployment growth at older ages was largely offset by growth in the number of older adults choosing to work longer. Half of women and more than half of men now wait until after age 62 to claim their retirement benefits, the largest proportions in decades. The recent increase in Social Security's full retirement age has prompted many retirees to wait at least until they turn 66 years old to begin collecting benefits, as a quarter of men now claim at that age or later.
How Do the Changing Labor Supply Behavior and Marriage Patterns of Women Affect Social Security Replacement Rates? (Series/The Retirement Project Discussion Papers)April Yanyuan Wu, Nadia Karamcheva, Alicia H. Munnell, Patrick Purcell
|Posted: July 29, 2013||Availability: HTML | PDF|
Using data from the Health and Retirement Study and Modeling Income in the Near Term, this paper examines the impact of the changing lives of women on Social Security replacement rates. Replacement rates have dropped sharply at both the household- and individual-level, and the decline will continue for future retirees. Decomposing the reasons for the overall decline shows that increases in the labor supply and earnings of women explain more than one-third of the change. In contrast, the impact of changing marital patterns is relatively small. Much of the remaining explanation rests with the increased Full Retirement Age and changing claiming behaviors.
How Important is Social Security Disability Insurance to U.S. Workers? (Policy Briefs/Retirement Project Brief Series)Melissa M. Favreault, Richard W. Johnson, Karen E. Smith
|Posted: July 29, 2013||Availability: HTML | PDF|
Social Security Disability Insurance (DI) is a vital part of the nation's social safety net, providing essential financial support to millions of disabled workers and their families. Nearly half of beneficiaries rely on the program for the majority of their family income. A fifth receive nearly all of their income from DI. The program is not particularly generous, however, and many beneficiaries face financial hardship. Average family incomes are only about half as large for DI beneficiaries as nonbeneficiaries. Efforts to address Social Security's financing problems should recognize the crucial support that Social Security provides to Americans with disabilities.
Reforming Social Security Benefits (Testimony)C. Eugene Steuerle
|Posted: June 21, 2013||Availability: HTML | PDF|
Reform of the Social Security benefit structure should proceed on the basis of principles and goals related to adequacy, protections in old age, encouragement of work to protect the tax base on which programs like this depend, and equal justice under the law for those equally situated. Many features of current law violate basic principles of public finance without promoting other worthy goals in an effective or well-targeted manner. In his testimony before the House Ways and Means Subcommittee on Social Security, Gene Steuerle lays out how to go beyond the types of options put forward by many proposals under consideration to achieve such reform.
|Posted: May 23, 2013||Availability: HTML | PDF|