“Finally, beginning in 1949 you and your employer will each pay three cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.” Social Security in Your Old Age, Social Security Board, 1936

Social Security Benefits as a Function of Earnings 0¢/$ $1,865.89 15¢/$ $1,535.44 Social Security Benefits (PIA) 32¢/$ $550.80 90¢/$ $0 $612 $3,689 $5,892 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 Average Indexed Monthly Earnings (AIME)

Social Security in a Two-Period World Number of young workers Earnings per young worker Taxes paid per young worker Total taxes paid Number of old retirees Benefits to old retirees Taxes paid by old retirees Rate of return 1 100 $20,000 --- 2 105 $21,000 $2,100 $220,500 100 $2,205 ∞ 3 110 $22,050 $2,205 $242,550 105 $2,310 $2,100 10% 4 115 $23,153 $2,315 $266,225 110 $2,420 $2,205 10% 5 121 $24,310 115 $2,315 -∞

Redistribution under Social Security for a Single Male Earnings Level Retirees turn 65 in 1960 Retirees turn 65 in 1995 Retirees turn 65 in 2030 Low earner Average earner High earner $26,100 $36,500 $36,800 $12,500 -$5,100 -$37,100 -$4,100 -$56,200 -$248,500

SS Spending and Personal Savings Personal savings as a % of GDP SS spending as a % of GDP

SS Spending and the Elderly Poverty Rate Poverty rate among Americans over 65 SS spending as a % of GDP

SS Spending Labor Force Participation

Retirement Hazard Rate SS EEA SS FBA 0.25 0.20 Retirement Hazard Rate 0.15 0.10 0.05 55 60 62 65 70 Age

Retirement Hazard Rate 0.20 1960 SS EEA 0.15 SS FBA 0.10 0.05 55 62 65 70 0.20 Age 1970 0.15 0.10 Retirement Hazard Rate 0.05 55 62 65 70 0.20 Age 1980 0.15 0.10 0.05 55 62 65 70 Age

64 63 62 EEA Introduced in 1973 Mean Retirement Age 61 60 59 58 1968 1972 1976 1980 1984 1988 1992 Year

Historical OASDI Surplus or Deficit (billions of $) 2% 4% 9.6% 11.7% 3% 6%

Ratio of Elderly to every 100 People of Working Age

“Finally, beginning in 1949 you and your employer will each pay three cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.” Social Security in Your Old Age, Social Security Board, 1936

Redistribution under Social Security for a Single Male Earnings Level Retirees turn 65 in 1960 Retirees turn 65 in 1995 Retirees turn 65 in 2030 Low earner Average earner High earner $26,100 $36,500 $36,800 $12,500 -$5,100 -$37,100 -$4,100 -$56,200 -$248,500