What is Progressive Price Indexing?
AbstractAs just reiterated in the 2005 Trustees Report, Social Security faces a 75-year deficit equal to roughly 2 percent of taxable payrolls. Closing this gap requires either a cut in benefits or an increase in taxes. One approach to cutting benefits under consideration by the administration is to change how benefits are indexed. An earlier Just the Facts explored the implications for benefits of moving from “wage indexing” of benefits to “price indexing.” This Just the Facts describes a proposal for “progressive price indexing.” The notion is that benefits for low-wage earners would continue to rise in line with wages, while those for maximum earners would rise in line with prices; everyone in between would see some combination of the two. The implication is that replacement rates — benefits as a percent of pre-retirement earnings — for low earners would remain constant over time, but replacement rates for high earners would decline sharply. The higher the earnings, the sharper would be the decline.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Center for Retirement Research in its series Just the Facts with number jtf_17.
Length: 6 pages
Date of creation: Apr 2005
Date of revision:
Contact details of provider:
Postal: Hovey House, 140 Commonwealth Avenue, Chestnut Hill, MA 02467
Phone: (617) 552-1762
Fax: (617) 552-0191
Web page: http://crr.bc.edu/
More information through EDIRC
price indexing; replacement rates;
Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Grzybowski) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.