Melissa M. Favreault C. Eugene Steuerle () (Urban Institute)
Abstract
Our project uses DYNASIM3, the Urban Institute’s dynamic microsimulation model of the U.S. population, to simulate several alternative systems of Social Security auxiliary benefits. We specifically consider earnings sharing, a system in which a husband’s and a wife’s earnings records are combined and averaged over the duration of their marriage when computing Social Security benefits. We also consider whether other changes to Social Security’s benefit computations — like caregiver credits, minimum benefits, and more modest changes to spouse/survivor benefits — could improve program adequacy and horizontal equity with less complexity and fewer transition difficulties relative to earnings sharing. Each proposal we examine substitutes existing spouse (and, sometimes, all or parts of survivor) benefits with mechanisms that explicitly acknowledge marital partnerships, are more neutral with respect to marriage, and/or better target economically vulnerable people. All proposals are roughly cost-equivalent in 2050. We find that all three packages — earnings sharing, replacement of most of the spouse benefit with a minimum, and full spouse replacement with caregiver credits — reduced poverty modestly and made lifetime benefits more similar for couples paying the same amount in taxes relative to current law scheduled. The earnings-sharing proposal, however, only achieved the poverty reduction with significant adjustments to the treatment of surviving spouses through a self-financed survivor benefit. The packages reveal important tradeoffs among beneficiary groups, with particular tensions between workers and non-workers, and married, never married, divorced, and widowed persons.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.