Reforming Social Security with Personal Accounts
- Topics:
- Alternative Financing
- Tags:
- Finance,
- National Bureau Of Economic Research,
- Operational Accounting,
- Payroll,
- Payroll Solutions
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Overview: Under the mixed system, people would continue to pay the 12.4 percent payroll tax. On top of this, the 2.3 percent of earnings (up to the payroll tax threshold) that is deposited into PRAs by the government would be invested in a 60:40 stock-bond portfolio. The calculations in the paper assume that PRAs earn a 5.5 percent real rate of return (this is the average real postwar portfolio rate of return for such a portfolio, after a 0.4 percent allowance is made for administration costs). The researchers use the same forecasts for average wage growth and changing demographics that the Social Security Administration uses, and take into account the rise in the retirement age to 67 under current law.
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Format: HTML | Date: Jan 2003 | Pages: 1
