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Research Details

(UM06-16) - Assessing the Risks and the Costs of the Risks Posed by Social Security’s Potential Insolvency
Laurence J. Kotlikoff

Social Security must raise taxes or cut benefits, either now or later, to close its $11.1 trillion funding gap. This project measures the welfare effects of alternative adjustments and the costs of delaying the decision. Part 1 uses the Survey of Consumer Finances in conjunction with ESPlanner, a life-cycle planning program, to determine how alternative adjustments would affect sustainable living standards for different groups of Americans. Part 2 uses a life-cycle simulation model, with earnings and return uncertainty, to study the excess burden of government indecision – the extra costs on the public of waiting to resolve Social Security’s problems.

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