SCEPA’s Retirement Equity Lab (ReLab) is honored to be selected to participate in AARP’s Social Security Innovation Challenge. The project supports research by SCEPA Director Teresa Ghilarducci and ReLab Research Director Anthony Webb on “Catch-Up Contributions: A Voluntary, Equitable, and Affordable Solution to the Retirement Savings Crisis.”
AARP launched its Innovation Challenge in 2016 to identify and support policy proposals to strengthen Social Security. After receiving an “overwhelming number” of submissions, ReLab’s proposal is one out of seven chosen after a blind review by an expert panel.
Ghilarducci and Webb’s proposal aims to alleviate the lack of retirement savings amongst older workers and retirees by allowing workers to make “catch-up” contributions to Social Security via increased payroll deductions starting at age 40 or 50. At age 40, the contribution would constitute an additional 1.86% of salary in payroll taxes; at age 50, the contribution would be 3.1% of salary. Workers would be defaulted into the program with the ability to opt out – this way, contributions are viewed as a purchase of valuable future benefits rather than as a tax. The employer contribution would remain unchanged to ensure that older workers seeking employment would not face additional age discrimination.