Social Security Benefit Uncertainty under Individual Accounts
Amy Rehder Harris, John Sabelhaus, Michael Simpson
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1
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23
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Contemporary Economic Policy
1-16
January
2005
harris et al coep 2005.pdf4.02 MB
Abstract
Social Security reforms that include individual accounts change both the expected benefit and the benefit risk. This article uses a long-term stochastic forecasting model to estimate the distribution of expected benefits under a simple individual account, recognizing uncertainties in the current system. Introducing individual accounts increases the overall variability of benefit levels relative to current law; indeed the standard deviations of expected benefit gains exceed the level of those gains.