Advanced Search
MyIDEAS: Login to save this paper or follow this series

Should Social Security Benefits Increase with Age?

Contents:

Author Info

  • Martin Feldstein

Abstract

This paper shows that the optimal relation between social security benefits and retiree age depends on balancing the advantage of providing an otherwise unavailable actuarially fair annuity against the lower rate of return earned in a pay-as-you-go social security system. The ability of compulsory social security programs to provide an actuarially fair annuity implies that benefits should increase with age while the lower return on social security contributions than on private saving implies that a larger fraction of total benefits should be paid during the early years of retirement. In an economy that contains a mixture of rational life cycle savers and completely myopic individuals who do no saving, it is optimal for benefits to decline during the earlier part of the retirement period and then to begin rising. Numerical calculations based on actual macroeconomic parameters and representative survival probabilities suggest that the optimal age for minimum benefits occurs before age 75.

Download Info

If 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.
File URL: http://www.nber.org/papers/w2200.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2200.

as in new window
Length:
Date of creation: Mar 1987
Date of revision:
Publication status: Published as "Should Social Security Benefits Be Means Tested?", JPE, Vol. 95, no. 3 (1987): 468-484.
Handle: RePEc:nbr:nberwo:2200

Note: PE
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Oliver Paddison & Frédéric Docquier & Mohamed Bouzahzah, 2002. "Retraites, croissance et inégalités en présence d'individus myopes," Économie et Prévision, Programme National Persée, vol. 155(4), pages 31-44.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2200. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.