Research and Analysis by Robert Gesumaria
One aspect of the current debate about changing the Social Security program concerns how new rules might affect elderly women, many of whom have low income. This paper examines three possible changes: (1) a reduction in spousal benefits combined with a change in the computation of the survivor benefit, (2) a redefined minimum benefit, and (3) a 5 percent increase in benefits for persons aged 80 or older. The paper assesses the cost, distributional consequences, and antipoverty impact of each option.
Assessing the Performance of Life-Cycle Portfolio Allocation Strategies for Retirement Saving: A Simulation Study
The investment performance of life-cycle portfolio allocation strategies is evaluated using a stochastic simulation based on historical asset returns during 1926–2008. Lifetime contribution streams to the accounts are determined using the actual earnings histories of 13,000 workers born in 1915–1942. The results are compared with those of four alternative strategies that vary in terms of investor exposure to stock and bond market risk.
Higher labor force participation rates for people aged 62–79 are associated with a dramatic increase in the share of their total money income attributable to earnings. For persons aged 65–69, the earnings share increased from 28 percent in 1980 to 42 percent in 2009. Two decades ago, Social Security benefits and earnings were roughly equal shares of total money income (about 30 percent); the earnings share is now more than 12 percentage points larger. The marked increase in the importance of earnings as an income source is also evident throughout the 62–79 age range among Social Security beneficiaries.
Military veterans constitute an important subgroup of Social Security beneficiaries. Because veterans are a large subgroup of Social Security beneficiaries and because policymakers have shown a clear interest in their well-being, it is important to understand how veterans and their dependents are currently faring. This note looks at the characteristics and trends in growth of the veteran and Social Security populations.