Assessing the Risks and the Costs of the Risks Posed by Social Security’s Potential Insolvency

Published: 2006
Project ID: UM06-16


Social Security must raise taxes or cut benefits, either now or later, to close its $11.1 trillion funding gap. This project measures the welfare effects of alternative adjustments and the costs of delaying the decision. Part 1 uses the Survey of Consumer Finances in conjunction with ESPlanner, a life-cycle planning program, to determine how alternative adjustments would affect sustainable living standards for different groups of Americans. Part 2 uses a life-cycle simulation model, with earnings and return uncertainty, to study the excess burden of government indecision – the extra costs on the public of waiting to resolve Social Security’s problems.



Laurence Kotlikoff