In particular the author studies the direct effects that changes in nefits indexing have on retirees who differ in two important ways initial wealth at retirement and mortality rates after retirement. The author proposes a simple but flexible theoretical framework that converts nefits reform first into changes to retirees consumption.
Paths and then into a net effect
On social welfare. He uses recently produc data on the net worth nefit levels and mortality risks of Social Security neficiaries by lifetime income decile to provide quantitative results. Finally he introduces survey evidence on the priorities Americans have for Social Malta Email List Security a first step in pinning down the normative implications of these effects of indexing reform. the value retirees place on protection against longevity risk is an important caveat to the widespread enthusiasm for a switch to a slower growing price index such as the chain CPI U. Key concepts include This paper outlines a flexible and relatively simple formal structure for modeling tradeoffs in the direct effects of nefits indexing reform on a population of diverse retiree households.
A useful metaphor for thinking about
The direct effects of indexation on a wide range of retirees is a playground seesaw where two facts about retir households in the Unit States push Canada Email List down on opposite ends. Variation across retiree households means that any given reform to nefits indexing generates effects with exactly opposite welfare implications. A large majority of retirees are likely to sit on the left end of the seesaw that is favor a steeper path of nefits that effectively annuitizes more of a given retiree s total wealth.
