A Guide To Social Security Money S Worth Issues

Studies the balance between social security taxes and benefits over workers' entire lifetimes.

This paper discusses some of the major issues associated with the question of whether workers receive their money's worth from the Social Security program. An effort is made to keep the discussion as nontechnical as possible, with explanations provided for many of the technical terms and concepts found in the money's worth literature. Major assumptions, key analytical methods, and money's worth measures used in the literature are also discussed. Finally, the key findings of money's worth studies are summarized, with some cautions concerning the limitations and appropriate usage of money's worth analyses.

The United States social security system is the nation's largest social insurance program. As such, it has a far-reaching impact throughout the economy, influencing not only old-age economic security but also many behaviors, including corporate employment policy, retirement patterns, and personal saving. In the past, the system's universal coverage and generous benefits ensured popular support to a degree enjoyed by no other form of "big government" social spending. Yet over two-thirds of all Americans today believe that the social security system will face bankruptcy by the time they retire. The question of social security reform—how to reform the system or whether the system needs reform at all—is the subject of heated debate at all levels of government, in the media, and among workers, pensioners, and employers. Prospects for Social Security Reform informs the debate by exploring why the system is at a crossroads today and what to do about it. Contributors detail the size and nature of the problem, explain views of key "stakeholders" regarding reform options, and report new evidence on how reform might affect the economy. Research findings and public opinion polls are analyzed, as are lessons from other countries experimenting with new ways to deliver old-age benefit promises. No other volume includes as diverse and expert a set of perspectives on reform and privatization as those gathered here from economists, actuaries, employers, investment managers, and representatives of organized labor. Among its chapters is the path-breaking study "Social Security Money's Worth," the 1999 winner of the TIAA-CREF's Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security.