Providing Guarantees In Social Security
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Overview: Some Social Security reforms would provide guarantees that individuals would not receive less under a reformed system than would be provided by current law. However, the ""Current law"" benefits formula increases benefits when wages rise. Any reform successfully adding to economic growth, therefore, would affect those promised levels of benefits, as well as revenues and the interest rates that determine what could be earned and paid out of individual accounts. This paper concludes that guarantees could add significantly to the costs of Social Security and reduce any reduction in budget imbalance achieved through other parts of a reform.