Retirement Effects of Proposals by the President's Commision to Strengthen Social Security

Abstract

A structural dynamic model of retirement and saving is used to simulate the retirement effects of proposals made by the President's Commission to Strengthen Social Security. Provisions reducing the growth in real benefits and increasing actuarial incentives to work reduce retirements. They more than offset increases in retirements caused by individual accounts, increased benefits for low wage workers and survivors, and reductions in the top AIME bracket. By 2075, the Commission's proposals would reduce retirements at age 62 by roughly 4 percentage points, mitigating an 8.7 percentage point trend to earlier retirement projected to reassert itself after its recent interruption.