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Sustainable Social Security: What Would It Cost?

Listed author(s):
  • Lee, Ronald
  • Yamagata, Hisashi

The standard measure of the 75-year Social Security imbalance is 1.87 percent of payroll, but raising taxes this much would not make finances sustainable. We consider exact and approximate infinite horizon measures based on different strategies for extending the projections past 75 years. These indicate imbalances of 3.1 to 5.7 percent of payroll. We also suggest a simpler common sense measure: the tax increase necessary to make the Trust Fund Ratio equal in the 74th and 75th years. Under the Trustees’ mortality projection, it indicates 3.1 percent imbalance, with a more rapid mortality decline of 4.2 percent. All sustainability measures indicate greater imbalance than is currently thought.

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Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 56 (2003)
Issue (Month): 1 (March)
Pages: 27-43

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Handle: RePEc:ntj:journl:v:56:y:2003:i:1:p:27-43
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