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Saving Social Security

Saving Social Security Journal of Economic Perspectives—Volume 19, Number 2—Spring 2005—Pages 11–32 or almost 70 years, Social Security has provided retirees with a basic level of income that is protected against inflation, financial market fluctuations and the risk of outliving one’s assets. It protects against other risks as well, such as disability or the death of a family wage earner. In addition, through its progressive structure, Social Security provides some protection against one’s career not turning out well. Social Security plays a critical role in providing financial security during retirement: It provides the majority of income for two-thirds of elderly beneficiaries, and all income for 20 percent of elderly beneficiaries. Over the next 75 years, Social Security costs are projected to rise by about 2.5 percent of Gross Domestic Product (GDP), while revenues are projected to decline slightly as a share of GDP. Social Security’s long-term financial health can be restored through either minor adjustments or major surgery. In our view, major surgery is neither warranted nor desirable—sustainable solvency and improved social insurance can be accomplished by a progressive reform that combines modest benefit reductions and revenue increases (as presented in more detail in Diamond and Orszag, 2004). We begin by http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Perspectives American Economic Association

Saving Social Security

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References (26)

Publisher
American Economic Association
Copyright
Copyright © 2005 by the American Economic Association
Subject
Symposia
ISSN
0895-3309
DOI
10.1257/0895330054048722
Publisher site
See Article on Publisher Site

Abstract

Journal of Economic Perspectives—Volume 19, Number 2—Spring 2005—Pages 11–32 or almost 70 years, Social Security has provided retirees with a basic level of income that is protected against inflation, financial market fluctuations and the risk of outliving one’s assets. It protects against other risks as well, such as disability or the death of a family wage earner. In addition, through its progressive structure, Social Security provides some protection against one’s career not turning out well. Social Security plays a critical role in providing financial security during retirement: It provides the majority of income for two-thirds of elderly beneficiaries, and all income for 20 percent of elderly beneficiaries. Over the next 75 years, Social Security costs are projected to rise by about 2.5 percent of Gross Domestic Product (GDP), while revenues are projected to decline slightly as a share of GDP. Social Security’s long-term financial health can be restored through either minor adjustments or major surgery. In our view, major surgery is neither warranted nor desirable—sustainable solvency and improved social insurance can be accomplished by a progressive reform that combines modest benefit reductions and revenue increases (as presented in more detail in Diamond and Orszag, 2004). We begin by

Journal

Journal of Economic Perspectives – American Economic Association

Published: May 1, 2005

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