Reforming Social Security: The Challenge of Income Inequality

19 Pages Posted: 7 Mar 2019

See all articles by David W. Rasmussen

David W. Rasmussen

Pepper Institute on Aging and Public Policy

Date Written: February 27, 2019

Abstract

Objective: This article examines the role Social Security plays in alleviating poverty among retirees in the context of threats to its solvency.

Method: Examining long-term employment trends, declining access to defined benefit pensions and saving behavior can determine if in the more future Social Security beneficiaries are likely to be poor.

Results: Labor market trends driven by technical change, global competition and increasing demand for services indicate that more future retirees will have lower life-time earnings that yield lower social security benefits and reduced saving for retirement. Coupled with a significant decline in defined benefit plans, older Americans are more likely to face more financial hardship after they can no longer work.

Conclusion: Poverty among retirees will rise unless social security benefits for low-income retiree are increased. Cutting benefits for high-income retirees can erode political support for Social Security, suggesting that general revenue is the best source of funding to combat poverty among older Americans. Taxing wealth is a possible source of revenue.


Keywords: Social Security Reform, Solvency, Poverty in Retirement, Income Inequality, Wealth Taxation

Suggested Citation

Rasmussen, David W., Reforming Social Security: The Challenge of Income Inequality (February 27, 2019). Available at SSRN: https://ssrn.com/abstract=3343615 or http://dx.doi.org/10.2139/ssrn.3343615

David W. Rasmussen (Contact Author)

Pepper Institute on Aging and Public Policy ( email )

636 West Call St.
Tallahasse, FL 30306-1121
United States
904-644-8826 (Phone)
904-644-0581 (Fax)

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