Sustainable Social Security: What Would it Cost?

Posted: 24 Apr 2003

See all articles by Ronald D. Lee

Ronald D. Lee

University of California, Berkeley - Department of Demography; National Bureau of Economic Research (NBER)

Hisashi Yamagata

Montgomery County Circuit Court

Abstract

The standard measure of the 75-year Social Security imbalance is 1.87 percent of payroll, but raising taxes this much would not make finances sustainable. We consider exact and approximate infinite horizon measures based on different strategies for extending the projections past 75 years. These indicate imbalances of 3.1 to 5.7 percent of payroll. We also suggest a simpler common sense measure: the tax increase necessary to make the Trust Fund Ratio equal in the 74th and 75th years. Under the Trustees' mortality projection, it indicates 3.1 percent imbalance, with a more rapid mortality decline of 4.2 percent. All sustainability measures indicate greater imbalance than is currently thought.

Suggested Citation

Lee, Ronald D. and Yamagata, Hisashi, Sustainable Social Security: What Would it Cost?. Available at SSRN: https://ssrn.com/abstract=396881

Ronald D. Lee (Contact Author)

University of California, Berkeley - Department of Demography ( email )

2232 Piedmont Avenue
Berkeley, CA 94720-2120
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Hisashi Yamagata

Montgomery County Circuit Court ( email )

50 Maryland Ave.
Rockville, MD 20850
United States

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