LONG RANGE COST ESTIMATE MODEL FOR SOCIAL SECURITY

Project Details

Description

The Social Security system in the U.S. is the primary source of economic
security to the majority of older Americans. The current system is large
and complex, and, due to the projected financing deficit, many changes
have been proposed to the Social Security program. The objective of this
project is to develop a financing model of the Social Security system that
could be used by policy makers, researchers, and interest groups to create
reasonable reform proposals and to evaluate the resulting effects on the
system and beneficiaries. The financing model will be based on economic
and demographic assumptions and will produce estimates of the year-by-year
cash flow into and out of the Trust Funds, as well as the long-range cost
rates, income rates, and actuarial balances. The model will also have the
capability to analyze proposals to privatize all or some portions of the
current program, and to show the net effect on beneficiaries (e.g., the
adjusted social security benefit and the amount of the privately-financed
annuity that would be available to beneficiaries). Currently, the Office
of the Actuary at Social Security is the only entity, public or private,
with the ability to make long-range cost estimates on the Social Security
program. Even the Congressional Budget Office only has the ability to
make short-range projections. Therefore, the proposal would create a
unique and needed capability to analyze Social Security reform.

PROPOSED COMMERCIAL APPLICATION: The social Security (SS) financing model
would be marketed to private groups interested in SS policy issues or
reform, researchers and consultants, the Advisory Board on SS, insurance
companies, and govt. agencies such as the CBO, the Office of the Actuary,
SSA, and Congressional staff. Private groups that have not only expressed
interest in SS reform, but currently have created task forces to study
such issues, include the U.S. Chamber of Commerce, AARP, the Business
Roundtable, the Cato Institute, the National Assn. of Manufacturers, the
National Federation of Independent Business, the Council of Life Insurers,
the American Bankers Assn., the Investment Co. Institute, and the Business
Leadership Council.
StatusFinished
Effective start/end date9/30/975/31/98

Funding

  • National Institute on Aging

ASJC

  • Strategy and Management

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