Retirement Income for an Aging Population a Report
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DOCUMENT RESUME ED 290 078 CG 020 441 TITLE Retirement Income for an Aging Population. A Report Prepared by Congressional Research Service, Library of Congress, with Analytic Support from the Congressional Budget Office. Committee on Ways and Means, U.S. House of Representatives, One Hundredth Congress, First Session. INSTI7UTION Congress of the U.S., Washington, D.C. House Committee on Ways and Means.; Library of Congress, Washington, D.C. Congressional Research Service. REPORT NO WMCP-100-22 PUB DATE 25 Aug 87 NOTE 433p. AVAILABLE FROMSuperintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. PUB TYPE Legal/Legislative/Regula4-ory Materials (090) -- Reports - General (140) Collected Works General (020) EDRS PRICE MF01/PC18 Plus Postage. DESCRIPTORS *Aging (Individuals); Demography; *Yutures (of Society); Health Needs; *Income; Medical Services; *Population Trends; Poverty; *Retirement; *Retirement Benefits IDENTIFIERS Congress 100th; Social Security ABS1RACT This document presents an extensive report on retiremert income prepared by the Congressional Research Service at the request of Congressman Dan Rostenkowski, The report consists of an executive summary, an overview of the issue, ano a series of background papers. Part I provides an overview of retirement income for an aging population and contains an introduction and discussions of the following issues: demography; preparing for the retirement of the baby boom; federal policies and roles in retirement income; the influence of income on retirement patterns; building claims for retirement income; and aging, health, and medical care. Part II contains an introduction and nine background papers: (1) "Demographics and the Aging Population" (Jeanne E. Griffith); (2) "The Dependency Burden of an Aging Population: What Measures Do We Have" (David Koitz); (3) "Preparing for the Retirement of the Baby Boom: Saving and Investing" (Robert Hartman and Larry Ozanne); (4) "Income, Wealth, Poverty and the Life Cycle" (Thomas Gabe); (5) "Work, Earnings and Retirement" (C..11yn L. Merck); (6) "Individual Retirement Saving and Dissaving" (Richard A. Hobbie); (7) "Social Security" (Geoff Kollmann); (8) "Private Pension Plans" (Ray Schmitt, David Lindeman, and Edwin Hustead); and (9) "Aging, Health, and Medical Care" (James Reuter and P. Royal Shipp). Forty tables and 62 figures are included, (NB) *********************************************************************** Reproductions supplied by EDRS are the best that can be made from the original dor milt. ******************************************4**************************** 100TH CONGRESS 1 WMCP: CC MMITTEE PRINT 1st Session J 1 100-22 COMMITTEE ON WAYS AND MEANS U.S. HOUSE OF REPRESENTATIVI'S RETIREMENT INCOME FOR AN AGING POPULATION A REPORT PREPARED BY CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS, WITH ANALYTIC SUPPORT FROM THE CONGRESSIONAL BUDGET OFFICE AUGUST 25, 1987 Printed for use or the Committee on Ways a.ld Means U.S. GOVERNMENT PRINTIN OFFICE 76-424 WASE.INGTON :1987 For sale by the Superintendent of Documents, U.S Government Printing Office Washington, DC 20402 3 COMMITTEE ON WAYS AND MEANS DAN ROSTENKOWSKI, Illinois, Chairman SAM M. GIBBONS, Florida JOHN J. DUNCAN, Tennessee J.J. PICKLE, Texas BILL ARCHER, Texas CHARLES B. RANGEL, New York GUY VANDER JAGT, Michigan FORTNEY H. (PETE) STARK, California PHILIP M. CRANE, Illinois ANDY JACOBS, JR., Indiana BILL FRENZEL, Minnesota HAROLD FORD, Tennessee DICK SCHULZE, Pennsylvania ED JENKINS, Georgia BILL GRADISON, Ohio RICHARD A. GEPHARDT, Missouri WILLIAM M. THOMAS, California THOMAS J. DOWNEY, New York RAYMOND J. McGRATH, New York FRANK J. GUARINI, New Jersey HAL DAUB, Nebraska MARTY RUSSO, Illinois JUDD GREGG, New Hampshire DON J PEASE, Ohio HANK BROWN, Colorado ROBERT T. MATSUI, California ROD CHANDLER, Washington BERYL ANTHONY, JR., Arkansas RONNIE G. FLIPPO, Alabama BYRON L. DORGAN, North Dakota BARBARA B. KENNELLY, Connecticut BRIAN J. DONNELLY, Massachusetts WILLIAM J. COYNE, Pennsylvania MICHAEL A. ANDREWS, Texas SANDER M. LEVIN, Michigan JIM MOODY, Wisconsin ROBERT J LEONARD, Chief Counsel M. KENNETH BOWLER, Staff Director A.L Sirrotrrox, Minority Chief of Staff \ 4 ',ETTER OF SUBMITTAL CONGRESSIONAL RESEARCH SERVICE, THE LIBRARY OF CONGRESS, Washington, DC, August 25, 1987. Hon. DAN ROSTENKOWSKI, Chairman, Committee on Ways and Means, House of Representatives, Washington, DC. DEAR MR. CHAIRMAN: A year ago you asked the Congressional Research Service (CRS) to analyze potential issues facing the retire- ment income system in the future. Your letter expressed particular interest in the effects on retirement income policies and programs of the coming retirement of the baby-boom generation. This report, prepared by a team of analysts from CRS and the Congressional Budget Office (CBO), responds to your request. Upon receipt of the Committee's request last summer, CRS con- tacted CBO to see if it would be possible to enlist the support of analysts from that agency with particular backgrounds needed to analyze the complicated issues raised by your request. Four ana- lysts from CBO joined 10 colleagues from CRS, with both groups participating fully as members of a team that planned the study and carried out its analysis. The team met regularly during the latter half of 1986 and early 1987, during which time agreements were reached on an overall approach for the project and assignments were made for drafting nine background papers. These papers were then used to prepare an executive summary and an overview of the project. These sec- tions of the report attempt to synthesize the important findings and conclusions of the study, and to formulate an analytic frame- work for understanding the issues. The background papers formed the foundation for this synthesis, supplemented by team discus- sions and other sources of information. The report then, consists of three parts: an executive summary, an overview, and a series of background papers. We hope this report meets the needs of the Committee on Ways and Means. Sincerely, JOSEPH E. Ross, Director. r) IV COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES, Washington, DC June 25, 1986. Mr. JOSEPH E. Ross, Director, Congressional Research Service, Library of Congress, 213 Madison Library, Washington, DC DEAR MR. Ross: Last year, the Committee on Ways and Means began a comprehensive review of the Nation's retirement income system. This review was motivated by the Committee's concern about the relationship am_ng the various means for providingre- tirement income that together make up our national retirement income system, and their adequacy and equity in meeth4 retire- ment needs. Future proposals to change social security or tax policy affecting employee benefit and savings for retirement must be reviewed in this broad context. While we expect the Congress to enact major tax legislation later in this session of Congress, and while there currentlyare !lc, plans for substantial changes in social security, we realize that theseare issues that the Congress must revisit periodically as economic, social, ard political situations change. In particular, the retirement of the baby-boom generation may, according tomany experts, strain the Nation's ability to provide adequate retirement income for this large cohort, whether these resources come from publicor private sector plans. Insofar as possible, the implications of this de- mographic shift should be taken into account as proposals for legis- lative changes are considered. During the current Congress, the Committee began its review of the Nation's retirement income system. The Subcommitteeson Social Security and Oversight have held a series of successful and informative hearingsassisted by analysts in CR.S's Education and Public Welfare Division. We intend to continue this work in the 100th Congress and are asking CRS to provide continued support to our effort by preparing a report that deals with potential issues of the retirement income system in the future. We would hope sucha report could assess the goals of the retirement income system, con- sider measures of economic status and income adequacy, provide descriptions of the set of programs and policies that make up our current system, and analyze future issue.c. This report would provide the Committee with a base line of common data and issue definition, as well as a framework of analy- sis for the ongoing development of specific legislative approaches to the overall problem of providing retirement income security now and in the future. To be of most use to the Committee, we ask that this work be finished by the end of De,:ember 1986. With warm regards, I am Sincerely, DAN ROSTENKOWSKI, Chairman. 6 PREFACE In the summer of 1986, the Committee on Ways and Means asked the Congressional Research Service (CRS) to conduct a study that would assess the effects of the retirement of the baby-boom generation on the Nation's retirement income system. The purpose of the study was to determine, given the uncertain nature of all data about the future, what could be reasonably said about the system of public and private claims upon the economy that the baby boom is building as it nears old age, and the potential impli- cations for society of honoring those claims in the context of a changing demographic profile. As expected, such an ambitious study encountered the difficulty of mixing perspectives from different disciplines and subject exper- tise. While much has been said and written about the baby boom and