Abstract
Because they ignore the household-level and macroeconomic adjustments associated with longevity improvements, the actuarial projections of the Social Security Administration overestimate the Social Security crisis. Using a general-equilibrium model with heterogeneous households and incomplete markets, I show that with these adjustments accounted for, a significantly smaller decline in benefits is needed to balance the Social Security budget. Households respond by delaying retirement and Social Security benefit collection, by working more hours, and by also saving more. In general equilibrium, these effects lead to a natural expansion of Social Security's tax base and generate significant delayed retirement credits, which the actuarial estimates completely overlook.
Publisher
Cambridge University Press (CUP)
Subject
Economics and Econometrics
Reference48 articles.
1. Social security and cross-country differences in hours: A general equilibrium analysis
2. Waldron Hilary (2005) Heterogeneity in Health and Mortality Risk Among Early Retiree Men. Working paper 105, Office of Policy, Office of Research, Evaluation, and Statistics, Social Security Administration.
3. Storesletten Kjetil , Gianluca Violante , and Jonathan Heathcote (2012) Redistributive Taxation in a Partial Insurance Economy. 2012 meeting paper 588, Society for Economic Dynamics.
4. Risky income, life cycle consumption, and precautionary savings
5. Shrestha Laura B. (2006) Life Expectancy in the United States. CRS report for Congress RL32792, Congressional Research Service.
Cited by
10 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献