Research & Analysis by Gayle L. Reznik
Retirement Savings Inequality: Different Effects of Earnings Shocks, Portfolio Selections, and Employer Contributions by Worker Earnings Level
Changes in accumulated retirement savings, particularly in employer-sponsored defined contribution (DC) plan balances, differ by worker earnings levels. Earnings shocks, portfolio diversification, and employer contributions to workers’ DC plans affect retirement savings for lower earners more than for higher earners. The authors match Survey of Income and Program Participation data to Social Security Administration earnings records and find factors underlying the different retirement savings outcomes by earnings level beyond mere differences in earnings.
This article examines the extent and economic consequences of involuntary unemployment among private-sector workers aged 26–55 during the Great Recession. Using data from the 2008 panel of the Survey of Income and Program Participation, the authors document the effects of involuntary unemployment on earnings, income, and health insurance coverage during the economic downturn and compare outcomes across worker demographic subgroups. Those outcomes are tracked at annual intervals over a 3-year follow-up period and are compared with those of workers who did not experience a job loss. The authors discuss their findings in the context of retirement security in general and Social Security in particular.
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.
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.
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.
This article examines the demographic challenge of an aging population on the U.S. Social Security system and the well-being of the elderly. It describes policy implications and some potential policy solutions to this challenge.