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Social Security Expectations and Retirement Savings Decisions (WP-02-02)

Jeff Dominitz, Charles F. Manski, and Jordan Heinz

Retirement savings decisions should depend on expectations of Social Security retirement income. Persons may be uncertain of their future Social Security benefits for several reasons, including uncertainty about their future labor earnings, the formula now determining social security benefits, and the future structure of the Social Security system. To learn how Americans perceive their benefits, we have elicited Social Security expectations from respondents to the Survey of Economic Expectations. We have also performed a more intensive face-to-face survey on a small sample of respondents. This paper presents the empirical findings. It also illustrates how data on expectations may help predict how Social Security policy affects retirement savings.

Jeff Dominitz, School of Public Policy and Management, Carnegie Mellon University

Charles F. Manski, Department of Economics, Northwestern University

Jordan Heinz, Department of Economics and School of Education and Social Policy, Northwestern University