Institute’s Dynamic Simulation of Income Model

Workers who delay retirement can save more and con-tribute more to the economy. Urban Institute simula-tions show that someone who works an extra five years could increase retirement spending by more than half. Also, work-inducing reforms—rather than reforms that simply reduce benefits—help close the Social Security funding gap. Delayed Retirement Could Ease Logjam An aging population and the approaching retirement of the largest birth cohort in U.S. history could mean a shortfall in promised Social Security benefits in 2017. After that, with baby boomers retiring in hoards, Social Security would be required to redeem bonds held by its Trust Funds. According to current projections, all Trust Fund assets will be depleted by 2041. This brief examines how changes in retirement behavior and reforms that encourage workers to stay on the job longer could ease the long-term funding logjam. The effectiveness of these changes is gauged using pro-jections of retirement age, Social Security take-up age, pensions, Social Security benefits, taxes, and other sig-nificant sources of income in retirement from the Urba