Reforming Social Security: The Effects of Personal Accounts on the Beneficiaries of Social Security

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It should be stressed that the kind of benefit calculator used to model these benefit outputs arouse out of academic infancy. In beginning this research, there existed no model off which to work, as Social Security Administration (SSA) had none that could be dissectible to individuals not fluent in C++ programming. The ‘black box’ calculator available to average folks could not be used to inform this work in any meaningful way. However, I was able to put together a current law benefit calculator based on information available at SSA that would become the basis for a current law benefit calculator and three subsequent models. It has come to my attention that two other calculators have been put together, one by the Heritage Foundation and another by the office of Senate Minority Leader, Harry Reid. The bickering that has occurred over the validity of those calculators only begins to highlight the variability of Social Security benefit calculators. The reliance on assumptions for a multitude of variables gives rise to stark variation in models. My own benefit calculator was forged in deliberation of what assumptions I should make for a model that projects so far into the future. Ultimately, I took the position of putting more burdens on the personal accounts side of the ledger. The conclusion of the paper discusses this decision in more detail, but the reader should be aware that this work is in some sense, a trial by fire evaluation of personal accounts. Placing greater burden on accounts ultimately paints a less rosy picture of the impact accounts have on individuals in the system, but this work is meant to harshly evaluate the virtues of personal accounts in the Social Security debate. I have 1 SSA, “AnyPIA Calculator.” sought to give a tough and honest account of reform models that include personal accounts. This toughness and honesty seeks only to strengthen the standing of accounts in comparison to current law “pay-as-you-go” models that have traditionally enjoyed more respect from the academic community. Think of this work as part of the national dialogue on Social Security reform and an effort to better understand, not whether one system is better than the other, but how one approach can be seen as better for some and how a different approach can be seen as better for others. I hope that the answer to the Social Security crisis will lie in an outcome that maximizes utility for all.