@techreport{NBERw5761,
 title = "The Transition Path in Privatizing Social Security",
 author = "Martin Feldstein and Andrew Samwick",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "5761",
 year = "1996",
 month = "September",
 URL = "http://www.nber.org/papers/w5761",
 abstract = {This paper analyzes the transition from the existing pay-as-you-go Social Security program to a system of funded Mandatory" Individual Retirement Accounts (MIRAs).  Because of the high return on real capital relative to the very low return in a mature pay-as-you-go program, the benefits that can be financed with the existing 12.4 percent payroll tax could eventually be funded with mandatory contributions of only 2.1 percent of payroll.  A transition to that fully funded program could be done with a surcharge of less than 1.5 percent of payroll during the early part of the transition.  After 25 years, the combination of financing the pay-as-you-go benefits and accumulating the funded accounts would require less than the current 12.4 percent of payroll.  The paper also discusses how a MIRA system could deal with the benefits of low income employees and with the risks associated with uncertain longevity and fluctuating market returns.},
}