00:00:00
let's start I guess with the backstory on looking at this these aspects uh of
00:00:05
wealth inequality tied to Social Security uh right so as you mentioned when people think of retirement a big
00:00:13
part of it is social security actually for most American most of their income during the retirement period does not
00:00:20
come from the stock of wealth that they have at the beginning but comes from the
00:00:24
Social Security benefits that they that they that they receive now uh all those promises that the government make they
00:00:31
have a value so you could think of it like if you were to go on the private Market you could buy an annity and that
00:00:38
annity would basically offer exactly the same type of terms as Social Security it
00:00:43
would like provide a monthly payment until the end of your life so there is a market value for what the government
00:00:50
provides and so one question is once you try to uh value those benefits the ones
00:00:57
that you have already acred because you have contributed into the system what's
00:01:02
the value of this how does it change the level of inequality that we see today and does it change also the trends in
00:01:10
wealth inequality because when we look at wealth excluding Social Security we see a steady increase in wealth
00:01:16
inequality since more or less the mid 1980s but what we find in our paper is that once you factor in Social Security
00:01:25
this positive trend in wealth inequality basically uh disappear so when you think
00:01:30
about value for Social Security how has that changed over the last several decades so it has changed enormously and
00:01:38
this has implication both for households but also for the government because of course what's uh we consider as an asset
00:01:45
for households is going to be a liability for the government but we are talking about I think right now
00:01:51
something that is close to 50 trillion doar where like the total stock of wealth excluding Social Security in the
00:01:57
US would be slightly more than 100 trillion so you have like 13 of the total that is Social Security and which
00:02:04
was not considered in inequality statistics before and so when you talk about the different income brackets
00:02:12
there's probably much more of a Reliance on Social Security as a component of
00:02:16
support in your retirement years for lower income families than it is for higher income families exactly so in
00:02:23
general As you move up in the income distribution people receive higher benefits yeah but that slope that Rel
00:02:29
relationship is much less pronounced than if you look at wealth in general and because there is much less
00:02:37
inequality in Social Security benefits adding it to the to the to to the bucket of the things that you consider as
00:02:45
wealth totally changes the picture that you uh that you have when you trace the level of inequality over time thank you
00:02:52
for listening to the ripple effect we hope you found this episode informative and engaging don't forget to subscribe
00:02:58
and leave us a review VI so that we can continue to bring you the best Insight from the Wharton School