Social Security reform with heterogeneous mortality

Using a heterogeneous agent, life-cycle model of Social Security claiming, labor supply and saving, we consider the implications of lifespan inequality for Social Security reform. Quantitative experiments show that welfare is maximized when baseline benefits are in-dependent of lifetime earnings, the payroll tax cap is 50% larger than its current level, and claiming adjustments are reduced. The Social Security system that would maximize wel-fare in a "2050 demographics" scenario, characterized by longer lifespans and an increased education-mortality gradient, is similar to the one that would maximize welfare today.(c) 2022 Elsevier Inc. All rights reserved.