CRR Center for Retirement Research at Boston College
DB defined benefit
DC defined contribution
EEA earliest eligibility age
FRA full retirement age
HRS Health and Retirement Study
RRC Retirement Research Consortium
SSA Social Security Administration
Background and Introduction
The Center for Retirement Research (CRR) at Boston College was established in October 1998 as part of the Social Security Administration's (SSA's) Retirement Research Consortium (RRC). To advance the RRC's larger goal "to inform the public and policymakers about policy alternatives and their consequences," the CRR's mission is to produce policy-relevant research on Social Security and retirement income issues, educate and train new researchers in the field of retirement income policy, and disseminate research findings to the research community, policymakers, and the general public.
The CRR and its affiliates-the Brookings Institution, the Massachusetts Institute of Technology, Syracuse University, and the Urban Institute-produce research studies that address Social Security and retirement income issues as part of the RRC's annual research cycle.1 The CRR also conducts research on Social Security and retirement income independent of the RRC initiative. To enlarge the pool of qualified researchers in the field of retirement income policy, the CRR manages SSA's Steven H. Sandell Dissertation Awards and other dissertation fellowship programs for junior scholars. Research findings are disseminated though the CRR's working papers and biweekly issue in brief series, delivered via e-mail to over 4,000 recipients, and as articles in refereed journals. The CRR has also produced literature that synthesize current research on key Social Security and retirement income policy issues.2
This article reviews the CRR's research contributions over its 10-year history and their implications for Social Security and retirement income policy in three major areas: (1) Social Security's long-term financing shortfall, (2) the adequacy of retirement incomes, and (3) labor force participation at older ages as a means to improve retirement income security. The CRR at Boston College has received substantial funding support from SSA in each area and has also successfully leveraged SSA's investment by attracting funding from other sources.
Social Security's Financing Shortfall
Social Security's long-term financing shortfall was the dominant policy concern throughout the CRR's existence. According to recent projections of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Fund (2009), benefit outlays will exhaust the Social Security trust fund in 2037.3 Ongoing tax revenues will then be able to pay only 76 percent of scheduled benefits, declining to 74 percent at the end of the program's 75-year projection period, in 2083.
The shortfall is hardly new. Congress, following recommendations of the Greenspan Commission, addressed the problem in 1983. It accelerated the introduction of scheduled tax increases, building up assets in the Social Security trust fund to pay future benefits; and it scheduled an increase in the full retirement age (FRA), from 65 to 67, to cut retirement benefits by about 13 percent when fully phased in. The 1983 Amendments to the Social Security Act closed the program's projected 75-year shortfall at the time, but they left the trust fund with growing projected annual deficits before the end of the 75th year, so the long-range solvency problem soon reemerged.
When the 1994-1996 Social Security Advisory Council (1997) revisited the problem, it considered more far-reaching reforms than combinations of tax increases and benefit cuts. Particularly noteworthy was the Advisory Council's consideration of potential investments in private equities that offer higher expected returns than those projected for the special-issue Treasury bonds held by the Social Security trust fund. …