Modeling (Simulation)
Disability
Disability Benefit Coverage and Program Interactions in the Working-Age Population
It is widely known that about three-fourths of the working-age population is insured for Disability Insurance (DI), but the substantial role played by the Supplemental Security Income (SSI) program in providing disability benefit coverage is not well understood. Using data from the 1996 panel of the Survey of Income and Program Participation (SIPP) we find that over one-third (36 percent) of the working-age population is covered by SSI in the event of a severe disability. Three important implications follow: (1) SSI increases the overall coverage of the working-age population; (2) SSI enhances the bundle of cash benefits available to disabled individuals; and (3) interactions with other public programs—most notably the SSI path to Medicaid coverage—also enhance the safety net. Ignoring these implications could lead to inaccurate inferences in analytic studies.
Counting the Disabled: Using Survey Self-Reports to Estimate Medical Eligibility for Social Security's Disability Programs
This paper develops an approach for tracking medical eligibility for the Social Security Administration's (SSA's) disability programs on the basis of self-reports from an ongoing survey. Using a structural model of the disability determination process estimated on a sample of applicants, we make out-of-sample predictions of eligibility for nonbeneficiaries in the general population. This work is based on the 1990 panel of the Survey of Income and Program Participation. We use alternative methods of estimating the number of people who would be found eligible if they applied, considering the effects of sample selection adjustments, sample restrictions, and several methods of estimating eligibility/ineligibility from a set of continuous probabilities. The estimates cover a wide range, suggesting the importance of addressing methodological issues. In terms of classification rates for applicants, our preferred measure outperforms the conventional single variable model based on the "prevented" measure.
Under our preferred estimate, 4.4 million people—2.9 percent of the nonbeneficiary population aged 18–64—would meet SSA's medical criteria for disability. Of that group, about one-third have average earnings above the substantial gainful activity limit. Those we classify as medically eligible are similar to allowed applicants in terms of standard measures of activity limitations.
A Structural Model of Social Security's Disability Determination Process
We estimate a multistage sequential logit model reflecting the structure of the disability determination process of the Social Security Administration (SSA), as implemented by state Disability Determination Services (DDS) agencies. The model is estimated using household survey information exactly matched to SSA records on disability adjudications from 1989 to 1993. Information on health, activity limitations, demographic traits, and work is taken from the 1990 Survey of Income and Program Participation. We also use information on occupational characteristics from the Directory of Occupational Titles, DDS workload pressure, and local area economic conditions from unpublished SSA sources. Under the program provisions, different criteria dictate the outcomes at different steps of the determination process. We find that without the multistage structural approach, the effects of many of the important health, disability, and vocational factors are not readily discernible. As a result, the split-sample predictions of overall allowance rates from the sequential model performed considerably better than the conventional approach based on a simple allowed/denied logit regression.
Macrosimulation
Stochastic Models of the Social Security Trust Funds
The 2003 Trustees Report on the Old-Age and Survivors Insurance and Disability Insurance Trust Funds contains, for the first time, results from a stochastic model of the combined trust funds of the OASDI programs. To help interpret the new stochastic results and place them in context, the Social Security Administration's Office of Policy arranged for three external modeling groups to produce alternative stochastic results. This article demonstrates that the stochastic models deliver broadly consistent results even though they use significantly different approaches and assumptions. However, the results also demonstrate that the variation in trust fund outcomes differs as the approach and assumptions are varied.
Stochastic Models of the Social Security Trust Funds
Simulating the Long-Run Aggregate Economic and Intergenerational Redistributive Effects of Social Security Policy
This paper reports on the status of a long-run simulation model of the U.S. economy and its relationships with the Social Security program that was designed with these considerations in mind. The model was developed specifically to analyze the potential equity and efficiency effects of alternative Social Security policies in a long-run context.
Econometric Models and the Study of the Economic Effects of Social Security
Microsimulation
The Sensitivity of Proposed Social Security Benefit Formula Changes to Lifetime Earnings Definitions
Several Social Security proposals have included benefit formula changes that apply to earners above a specified percentage of the combined male and female (unisex) lifetime earnings distribution. This study finds that if Social Security's median unisex average indexed monthly earnings (AIME) amount is used to define an earnings threshold below which benefits will be held unreduced, the percentage of fully insured men subject to benefit reductions (70 percent) will exceed the unisex estimate of the population subject to benefit reductions (50 percent) by 20 percentage points. If policymakers wish to adjust future benefits and focus benefit reductions on middle or high primary or full-time wage earners in a household, the male, rather than unisex, AIME would come closer to achieving such a goal.
Measures of Health and Economic Well-Being Among American Indians and Alaska Natives Aged 62 or Older in 2030
This Research and Statistics Note uses Modeling Income in the Near Term (MINT) projections to provide an overview of the demographic, health, and economic characteristics of the American Indian and Alaska Native (AIAN) population aged 62 or older in 2030. MINT projects that the AIAN population will fare worse than the overall aged population in 2030 according to measures of health status, work limitation status, disability status, lifetime earnings, per capita Social Security benefits, per capita income, per capita wealth, and poverty.
This Is Not Your Parents' Retirement: Comparing Retirement Income Across Generations
This article examines how retirement income at age 67 is likely to change for baby boomers and generation Xers compared with current retirees. The authors use the Modeling Income in the Near Term model to project retirement income, assets, poverty rates, and replacement rates for current and future retirees at age 67. In absolute terms, retirement incomes of future cohorts will increase over time, and poverty rates will fall. However, projected income gains are larger for high than for low socioeconomic groups, leading to increased income inequality among future retirees.
Racial and Ethnic Differences in the Retirement Prospects of Divorced Women
The authors use the Social Security Administration's Modeling Income in the Near Term (version 6) to describe the likely characteristics, work experience, Social Security benefit status, and economic well-being of future divorced women at age 70, by race and ethnicity. Factors associated with higher retirement incomes include having a college degree; having a strong history of labor force attachment; receiving Social Security benefits; and having pensions, retirement accounts, or assets, regardless of race and ethnicity. However, because divorced black and Hispanic women are less likely than divorced white women to have these attributes, income sources, or assets, their projected average retirement incomes are lower than those of divorced white women.
The Retirement Prospects of Divorced Women
To project the retirement resources and well-being of divorced women, the authors use the Social Security Administration's Modeling Income in the Near Term (version 6). Findings show that Social Security benefits and retirement incomes are projected to increase for divorced women and that their poverty rates are projected to decline, due in large part to women's increasing lifetime earnings. However, not all divorced women will be equally well off; economic well-being in retirement varies by Social Security benefit type.
The Impact of Changes in Couples' Earnings on Married Women's Social Security Benefits
This article uses the Social Security Administration's Modeling Income in the Near Term (version 6) to examine how changes in married women's labor force participation and earnings will impact the Social Security benefits of current and future beneficiary wives. Over the next 30 years, a larger share of wives will be eligible for Social Security benefits based solely on their own earnings, and wives' average Social Security benefits are expected to increase by 50 percent. Despite rising female lifetime earnings, wives' earnings typically remain below those of their husbands, so many wives who are retired-worker-only beneficiaries while their husbands are alive will receive auxiliary benefits when their husbands die.
Who Never Receives Social Security Benefits?
Approximately 4 percent of the aged population will never receive Social Security benefits. This article examines the prevalence, demographic characteristics, and economic well-being of these never-beneficiaries. Most never-beneficiaries do not have sufficient earnings to be eligible for benefits, and most of these insufficient earners are either late-arriving immigrants or infrequent workers. About 44 percent of never-beneficiaries are in poverty, compared with about 4 percent of current and future beneficiaries.
Distributional Effects of Price Indexing Social Security Benefits
This policy brief compares five options (four progressive price indexing and one full price indexing option) set forth by the Social Security Advisory Board to index initial benefits to price growth. It examines the distribution of benefits of Social Security beneficiaries aged 62 or older in 2030, 2050, and 2070 using Modeling Income in the Near Term (MINT) model projections. The brief finds that the full price indexing option Shield 0% would more than achieve long-term solvency by reducing benefits by about 35 percent in 2070 and would increase the aged poverty rate compared with scheduled levels. The four progressive price indexing options (Shields 30%, 40%, 50%, 60%) would produce smaller benefit reductions by exempting varying proportions of lower earners from price indexing. Those options would not increase poverty above scheduled levels, but would reduce benefits for some low earners because their auxiliary benefits come from the reduced benefits of a higher-earning spouse. The progressive price indexing options would make Social Security more progressive compared with scheduled and payable benefits, both when looking at household benefit reductions by household income in a given year and when examining the distribution of lifetime taxes and benefits.
Distributional Effects of Reducing the Social Security Benefit Formula
A person's Social Security benefit, or primary insurance amount (PIA), is 90 percent of the lowest portion of lifetime earnings, plus 32 percent of the middle portion of lifetime earnings, plus 15 percent of the highest portion of lifetime earnings. This policy brief analyzes the distributional effects of three options (the three-point, five-point and upper) discussed by the Social Security Advisory Board to reduce the PIA. The first option would reduce the PIA by 3 percentage points; the second would reduce it by 5 percentage points; and the third would reduce the 32 and 15 percentages of the PIA to 21 and 10 percent, respectively. The third option would exempt about one quarter of the lowest earning beneficiaries, while reducing benefits by a median average of 19 percent in 2070. None would eliminate Social Security's long-term fiscal imbalance, although the third option would eliminate more (76 percent) of the deficit than the three-point (18 percent) and five-point (31 percent) options.
Widows and Social Security
This article provides policymakers with context for understanding past and future policy discussions regarding Social Security widow benefits. Using data from household surveys, projections from a microsimulation model, and recent research, it examines three types of benefits—those for aged widows, widows caring for children, and disabled widows.
Distributional Effects of Raising the Social Security Payroll Tax
This policy brief analyzes the lifetime tax effects of two options for addressing the Social Security system's long-range solvency by raising the Social Security payroll tax rate. The first, an immediate increase, would have raised the payroll tax rate from its current 12.4 percent to 14.4 percent in 2006; the second, a phased increase, would raise the payroll tax rate to 14.5 percent in 2020, and then to 16.6 percent in 2050. The brief also analyzes a comparative scenario in which the current tax rate is maintained through 2041 and then raised each year as needed to pay scheduled benefits. The lifetime taxes of people born 1936–2015 are analyzed using Modeling Income in the Near Term (MINT) projections. Results show that the longer a tax rate increase is delayed, the fewer workers are affected, but also the higher the increase in lifetime taxes for later generations. The results also show that both options reduce the cross-cohort variability in the ratio of benefits received to taxes paid.
Low Levels of Retirement Resources in the Near-Elderly Time Period and Future Participation in Means-Tested Programs
This article describes the de facto standards of low income and resources reflected in the eligibility standards of the largest means-tested programs that serve the elderly and then applies these standards to a near-elderly cohort. Through juxtaposing retirement resources in the near-elderly time period with program participation in the elderly time period, the author indirectly examines some of the changes between the two time periods that could affect program eligibility, including spend-down of resources and marital dissolution. Retirement resource levels are estimated using the Survey of Income and Program Participation, and subsequent participation in one of the means-tested programs—Supplemental Security Income (SSI)—is examined using matched administrative records.
The Research Contributions of the Center for Retirement Research at Boston College
This article reviews the research contributions of the Center for Retirement Research at Boston College over its 10-year history and their implications for Social Security and retirement income policy in three major areas: (1) Social Security's long-term financing shortfall, (2) the adequacy of retirement incomes, and (3) labor force participation at older ages as a means to improve retirement income security. The center has received substantial funding support from the Social Security Administration (SSA) in each area and has also successfully leveraged SSA's investment by attracting funding from other sources.
The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Incomes of Baby Boomers
A large share of traditional defined benefit pension plans have frozen within the past decade and evidence suggests that this trend will continue in the future. This article uses the Model of Income in the Near Term (MINT) microsimulation model to project the impact on boomers' retirement incomes of freezing traditional pension plans and replacing them with 401(k)-type plans. The projections suggest that the largest impact will be for the most recent boomers born between 1961 and 1965.
Distributional Effects of Raising the Social Security Taxable Maximum
As of 2009, Social Security's Old-Age, Survivors, and Disability Insurance program limits the amount of annual earnings subject to taxation at $106,800, and this value generally increases annually based on changes in the national average wage index. This brief uses Modeling Income in the Near Term (MINT) projections to compare the distributional effects of four options for raising the maximum taxable earnings amount beyond its scheduled levels. Two of the options would raise this value so that it covers 90 percent of all covered earnings and two would remove the maximum completely. Within each set of options, the proposals are differentiated by whether the new taxable amounts are used in computing benefits. Most workers would not be affected by these proposals, but some higher earners would experience a substantial increase in taxes. Correspondingly, benefit increases are largely isolated to higher earners, although the return in benefits for taxes paid would also decline. Because the proposals are targeted toward high earners, Social Security's progressivity would increase.
Uses of Administrative Data at the Social Security Administration
This article discusses the advantages and limitations of using administrative data for research, examines how linking administrative data to survey results can be used to evaluate and improve survey design, and discusses research studies and SSA statistical products and services that are based on administrative data.
Earnings Sharing in Social Security: Projected Impacts of Alternative Proposals Using the MINT Model
Earnings sharing is an alternate method of calculating Social Security retirement benefits whereby earnings are assumed to be shared by married couples. This article presents a microsimulation analysis to estimate the impact of three earnings sharing proposals on the aged population of married, divorced, and widowed men and women in 2030. The impact of earnings sharing differs by marital status and sex, as measured by the percentage change in benefits and by the percentage of beneficiaries with increased and reduced benefits.
Social Security and Marginal Returns to Work Near Retirement
Using the Social Security Administration's MINT (Modeling Income in the Near Term) model, this paper calculates the marginal returns to work near retirement, as measured by the increase in benefits associated with an additional year of employment at the end of an individual's work life. With exceptions for certain population subgroups, the analysis finds that marginal returns on Social Security taxes paid near retirement are generally low. The paper also tests the effects on marginal returns of a variety of potential Social Security policy changes designed to improve incentives to work.
A Progressivity Index for Social Security
Using the Social Security Administration's MINT (Modeling Income in the Near Term) model, this paper analyzes the progressivity of the Old-Age, Survivors and Disability Insurance (OASDI) program for current and future retirees. It uses a progressivity index that provides a summary measure of the distribution of taxes and benefits on a lifetime basis. Results indicate that OASDI lies roughly halfway between a flat replacement rate and a flat dollar benefit for current retirees. Projections suggest that progressivity will remain relatively similar for future retirees. In addition, the paper estimates the effects of several policy changes on progressivity for future retirees.
Estimated Retirement Benefits in the Social Security Statement
Alternate Measures of Replacement Rates for Social Security Benefits and Retirement Income
Replacement rates are common and useful tools used by individuals and policy analysts to plan for retirement and assess the sufficiency of Social Security benefits and overall retirement income. Because the calculation and meaning of replacement rates differs depending on the definition of preretirement earnings, this article examines four alternative measures: final preretirement earnings, constant income payable from the present value of lifetime earnings (PV payment), wage-indexed average of lifetime earnings, and inflation-adjusted average of lifetime earnings (CPI average). The article also calculates replacement rates for Social Security beneficiaries aged 64–66 in 2005.
Disability Benefit Coverage and Program Interactions in the Working-Age Population
It is widely known that about three-fourths of the working-age population is insured for Disability Insurance (DI), but the substantial role played by the Supplemental Security Income (SSI) program in providing disability benefit coverage is not well understood. Using data from the 1996 panel of the Survey of Income and Program Participation (SIPP) we find that over one-third (36 percent) of the working-age population is covered by SSI in the event of a severe disability. Three important implications follow: (1) SSI increases the overall coverage of the working-age population; (2) SSI enhances the bundle of cash benefits available to disabled individuals; and (3) interactions with other public programs—most notably the SSI path to Medicaid coverage—also enhance the safety net. Ignoring these implications could lead to inaccurate inferences in analytic studies.
Incorporating Immigrant Flows into Microsimulation Models
Complementing the second paper's focus on forecasting immigrant earnings and emigration in a "closed system" for a given population, the last article of the trilogy explores how to project immigrant earnings for an "open system"—a system that includes future immigrants. A simple method to project future immigrants and their earnings is presented.
Adding Immigrants to Microsimulation Models
Given immigration's recent resurgence as an important demographic fact in the U.S. economy, U.S. policy modelers are just beginning to grapple with how best to integrate immigrants into policy models. Building on the research reviewed in the first article of this series, this article puts forth a conceptual basis for incorporating immigration into a key type of policy model—microsimulation—with a focus on the projection of immigrant earnings.
Research on Immigrant Earnings
As the first in a trio of articles devoted to incorporating immigration into policy models, this article traces the history of research on immigrant earnings. It focuses on how earnings trajectories of immigrants differ from those of U.S. natives, vary across immigrant groups, and have changed over time. The highlighted findings underscore key lessons for modeling immigrant earnings and pave the way for representing the earnings trajectories of immigrants in policy models.
Disabled Workers and the Indexing of Social Security Benefits
This article presents the distributional effects of changing the Social Security indexing scheme, with an emphasis on the effects upon disabled-worker beneficiaries. Although a class of reform proposals that would slow the rate of growth of initial benefit levels over time—including price indexing and longevity indexing—initially appear to affect all beneficiaries proportionally, there can be different impacts on different groups of beneficiaries. The impacts between and within groups are mitigated by (1) the offsetting effect of changes in Supplemental Security Income benefits at the lower tail of the income distribution, and (2) the dampening effect of other family income at the upper tail of the income distribution. The authors present estimates of the size of these effects.
Benefit Adequacy Among Elderly Social Security Retired-Worker Beneficiaries and the SSI Federal Benefit Rate
The federal benefit rate (FBR) of the Supplemental Security Income program provides an inflation-indexed income guarantee for aged and disabled people with low assets. Some consider the FBR as an attractive measure of Social Security benefit adequacy. Others propose the FBR as an administratively simple, well-targeted minimum Social Security benefit. However, these claims have not been empirically tested. Using microdata from the Survey of Income and Program Participation, this article finds that the FBR is an imprecise measure of benefit adequacy; it incorrectly identifies as economically vulnerable many who are not poor, and disregards some who are poor. The reason for this is that the FBR-level benefit threshold of adequacy considers the Social Security benefit in isolation and ignores the family consumption unit. The FBR would provide an administratively simple but poorly targeted foundation for a minimum Social Security benefit. The empirical estimates quantify the substantial tradeoffs between administrative simplicity and target effectiveness.
The Never-Married in Old Age: Projections and Concerns for the Near Future
This article focuses on a growing yet understudied subgroup of the elderly in the United States—the never-married. The first section, based on data from the Current Population Survey and a review of the academic literature, examines the current circumstances of never-married retirees, particularly their economic and health well-being. The succeeding section uses the Modeling Income in the Near Term (MINT) model to assess the projected (1) changes in the marital status composition of the future retirement-age population; (2) demographics of future never-married retirees, and (3) economic well-being of never-married retirees. The results highlight important links between marital trends, Social Security, and retirement outcomes and offer insight into some of the characteristics of current and future never-married retirees.
The Distributional Consequences of a "No-Action" Scenario: Updated Results
Under the Social Security program, benefits are paid to retired workers, survivors, and disabled persons out of two trust funds—the Old-Age and Survivors Insurance and the Disability Insurance (OASDI) Trust Funds. In their 2005 report, the Social Security Trustees projected that the combined OASDI trust funds would be exhausted in 2041. Because the trust funds are used to pay benefits, retirement benefits would have to be reduced somewhat in 2041 and more drastically in 2042.
If no action were taken to strengthen Social Security, the benefit reductions necessitated by the exhaustion of the trust funds would double the poverty rate of Social Security beneficiaries aged 64–78 in 2042, from 1.5 percent to 3.3 percent. However, this increased poverty rate would still be lower than the current poverty rate for beneficiaries aged 62–76, which is 4.6 percent. In addition, the trust funds' exhaustion could lead to lower returns on payroll taxes using traditional "money's-worth" measures.
The Distributional Consequences of a "No-Action" Scenario
The 2001 report of the Social Security trustees projected that the combined trust funds for the Old-Age and Survivors Insurance and Disability Insurance programs will be exhausted in 2038. This analysis explains the effects of insolvency on future retirement benefits and poverty rates of beneficiaries if no action is taken to strengthen Social Security.
Modeling SSI Financial Eligibility and Simulating the Effect of Policy Options
This article presents the Supplemental Security Income (SSI) Financial Eligibility Model developed in the Division of Policy Evaluation of the Office of Research, Evaluation, and Statistics. Focusing on the elderly, the article simulates five potential changes to the SSI eligibility criteria and presents the effects of those simulations on SSI participation, federal benefits, and poverty among the elderly. Finally, the article discusses future directions for research and potential improvements to the model.
Projecting Retirement Income of Future Retirees with Panel Data: Results from the Modeling Income in the Near Term (MINT) Project
This article describes a model that projects the retirement income of Social Security beneficiaries from 1997 through 2031 using a number of panel data sources. With these data, we examine the composition of retirement income for future retirees in various birth cohorts, racial groups, marital states, and educational categories.
The Role of Pensions in Retirement Income: Trends and Questions
Two Papers on a New SIPP-Based Microsimulation Model of SSI and OASDI
This working paper includes two interrelated papers presented at the annual meeting of the American Statistical Association in August 1991. The papers outline the central ideas and the progress to date associated with the development of a new microsimulation model for program analysis at the Social Security Administration (SSA). The first paper, Rationale for a SIPP-Based Microsimulation Model of SSI and OASDI, relates the analytical potential of the proposed model to data development efforts intended to overcome specific information gaps. It also suggests areas in which the model can enrich SSA's ability to address issues specifically related to either the Supplemental Security Income or Old-Age, Survivors, and Disability Insurance programs or issues requiring comparative analysis of both programs. The second paper, Implementing an SSI Model Using the Survey of Income and Program Participation, describes progress on a preliminary version of the model focusing on the SSI program. It includes a brief description of the model, presentation and discussion of initial results, and comparisons with other studies.
Policy Analysis Through Microsimulation: The STATS Model
Retirement
Distributional Effects of Price Indexing Social Security Benefits
This policy brief compares five options (four progressive price indexing and one full price indexing option) set forth by the Social Security Advisory Board to index initial benefits to price growth. It examines the distribution of benefits of Social Security beneficiaries aged 62 or older in 2030, 2050, and 2070 using Modeling Income in the Near Term (MINT) model projections. The brief finds that the full price indexing option Shield 0% would more than achieve long-term solvency by reducing benefits by about 35 percent in 2070 and would increase the aged poverty rate compared with scheduled levels. The four progressive price indexing options (Shields 30%, 40%, 50%, 60%) would produce smaller benefit reductions by exempting varying proportions of lower earners from price indexing. Those options would not increase poverty above scheduled levels, but would reduce benefits for some low earners because their auxiliary benefits come from the reduced benefits of a higher-earning spouse. The progressive price indexing options would make Social Security more progressive compared with scheduled and payable benefits, both when looking at household benefit reductions by household income in a given year and when examining the distribution of lifetime taxes and benefits.
Distributional Effects of Reducing the Social Security Benefit Formula
A person's Social Security benefit, or primary insurance amount (PIA), is 90 percent of the lowest portion of lifetime earnings, plus 32 percent of the middle portion of lifetime earnings, plus 15 percent of the highest portion of lifetime earnings. This policy brief analyzes the distributional effects of three options (the three-point, five-point and upper) discussed by the Social Security Advisory Board to reduce the PIA. The first option would reduce the PIA by 3 percentage points; the second would reduce it by 5 percentage points; and the third would reduce the 32 and 15 percentages of the PIA to 21 and 10 percent, respectively. The third option would exempt about one quarter of the lowest earning beneficiaries, while reducing benefits by a median average of 19 percent in 2070. None would eliminate Social Security's long-term fiscal imbalance, although the third option would eliminate more (76 percent) of the deficit than the three-point (18 percent) and five-point (31 percent) options.
Assessing the Performance of Life-Cycle Portfolio Allocation Strategies for Retirement Saving: A Simulation Study
The investment performance of life-cycle portfolio allocation strategies is evaluated using a stochastic simulation based on historical asset returns during 1926–2008. Lifetime contribution streams to the accounts are determined using the actual earnings histories of 13,000 workers born in 1915–1942. The results are compared with those of four alternative strategies that vary in terms of investor exposure to stock and bond market risk.
Social Security Research at the Michigan Retirement Research Center
The Office of Retirement and Disability Policy at the Social Security Administration created the Retirement Research Consortium in 1998 to encourage research on topics related to Social Security and the well-being of older Americans, and to foster communication between the academic and policy communities. The Michigan Retirement Research Center (MRRC) has participated in the Consortium since its inception. This article surveys a selection of the MRRC's output over its first 10 years and highlights several themes in the Center's ongoing research.
A Progressivity Index for Social Security
Using the Social Security Administration's MINT (Modeling Income in the Near Term) model, this paper analyzes the progressivity of the Old-Age, Survivors and Disability Insurance (OASDI) program for current and future retirees. It uses a progressivity index that provides a summary measure of the distribution of taxes and benefits on a lifetime basis. Results indicate that OASDI lies roughly halfway between a flat replacement rate and a flat dollar benefit for current retirees. Projections suggest that progressivity will remain relatively similar for future retirees. In addition, the paper estimates the effects of several policy changes on progressivity for future retirees.
Estimated Retirement Benefits in the Social Security Statement
Estimating the First Instance of Substantive-Covered Earnings in the Labor Market
Comparing Replacement Rates Under Private and Federal Retirement Systems
This article presents a comparison of replacement rates for employees of medium and large private establishments to replacement rates for federal employees under the Civil Service Retirement System and the Federal Employees Retirement System. This analysis shows the possibility of replacement rates exceeding 100 percent for FERS employees who contribute 6 percent of earnings to the Thrift Savings Plan over a full working career. Private-sector replacement rates were quite similar for workers with both a defined benefit and a defined contribution pension plan.
Methods in Modeling Income in the Near Term (MINT I)
This paper summarizes the work completed by SSA, with substantial assistance from the Brookings Institution, RAND, and the Urban Institute, for the Modeling Income in the Near Term (MINT I) model. In most cases, several methods of estimating and projecting demographic characteristics and income were researched and tested; however, this appendix describes only those methods eventually used in the MINT I model.
A General Model of Labor-Market Behavior of Older Persons
Other
The Out-of-Sample Performance of Stochastic Methods in Forecasting Age-Specific Mortality Rates
This paper evaluates the out-of-sample performance of two stochastic models used to forecast age-specific mortality rates: (1) the model proposed by Lee and Carter (1992); and (2) a set of univariate autoregressions linked together by a common residual covariance matrix (Denton, Feavor, and Spencer 2005).
Poverty-level Annuitization Requirements in Social Security Proposals Incorporating Personal Retirement Accounts
In the current discussions of Social Security reform, voluntary personal retirement accounts have been proposed. Recent research and debate have focused on several aspects of these accounts, including how such accounts would affect aggregate saving, system finances, and benefit levels. Little attention, however, has been paid to policies that would govern the distribution of account balances. This analysis considers such policies with respect to the annuitization of account balances at retirement using the Social Security Administration's Modeling Income in the New Term (MINT) model and a modified version of a recent legislative proposal to evaluate the effects of partial annuitization requirements.
