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Volume 10 Issue 1 - January 2009

Director's Corner

The financial crisis that has unfolded in the last few months, and government commitments and expenditures initiated to address it, exacerbate Federal budget deficits, which were already substantial. Now, more than ever, taking sensible steps to address imminent shortfalls in Social Security program finances seems critical not only to protect elderly Americans but also to ease general budgetary pressures to the greatest extent possible.


Over the last five years, the MRRC has sponsored research on Social Security reform. Such work adds to the national stock of knowledge, which can augment the menu of options for policy makers. For example, Laitner and Silverman, MRRC WP 2006-142, proposes and studies a simple reform in which a household’s OASI payroll tax would be lifted following a long vesting period (e.g., 34 years). The analysis suggests that average retirement ages might rise as much as a year and that even if the reform were calibrated to be revenue neutral for the Social Security system itself, Federal income tax revenues might be enhanced. The MRRC Key Findings on Social Security Reform, www.mrrc.isr.umich.edu/publications/findings/pdf/SOCIALSECURITY.pdf, summarizes other MRRC research on related topics.


As a new administration in Washington begins work on the challenges facing the Nation, it seems inevitable that it will be interested in exploring the role and continued strength of Social Security. The Michigan Retirement Research Center will be eager to play a part in informing that discussion.