From 1996 to 2004, Canada raised taxes for the Canada Pension Plan, its own version of Social Security. How did Canadians react? By saving less on their own, by about 90 cents for each dollar of new taxes. That’s the conclusion of a new study from the Fraser Institute, which you can read about in my latest column for Forbes.
Fraser’s results match up with a study of the UK pension system, which found that households offset private retirement savings against government pension benefits by 65-75 cents on the dollar.
My own quick-and-dirty comparison of Organization for Economic Cooperation and Development countries found that when a government plan offers an extra dollar of benefits, individuals reduce their own retirement saving and income from work in retirement by about 93 cents.
So while expanding Social Security might look like it would provide a big bump to retirement incomes, the truth is probably a lot less exciting. You can check out my whole column here.
from AEI » Latest Content http://ift.tt/1I4FuUE
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