The retirement income security of older Americans and the cost of providing that security are increasingly the subject of major debate. This volume assesses what we know and recommends what we need to know to estimate the short- and long-term effects of policy alternatives. It details gaps in data and research and evaluates possible models to estimate the impact of policy changes that could affect retirement income from Social Security, pensions, personal savings, and other sources. PANEL ON RETIREMENT INCOME MODELING ERIC A. HANUSHEK (Chair), W. Allen Wallis Institute of Political Economy, University of Rochester HENRY AARON, The Brookings Institution, Washington, D.C. ALAN J. AUERBACH, Department of Economics, University of Califomia, Berkeley CHRISTOPHER BONE, Actuarial Sciences Associates, Somerset, New Jersey PETER DIAMOND, Department of Economics, Massachusetts Institute of Technology MICHAEL HURD, Department of Economics, State University of New York, Stony Brook OLIVIA S. MITCHELL, Department of Insurance and Risk Management, The Wharton School, University of Pennsylvania SAMUEL H. PRESTON, Population Studies Center, University of Pennsylvania JOHN P. RUST, Department of Economics, Yale University TIMOTHY M. SMEEDING, Center for Policy Research, Syracuse University JAMES P. SMITH, The RAND Corporation, Santa Monica, California CONSTANCE F. CITRO, Study Director NANCY L. MARITATO, Research Associate CANDICE S. EVANS, Project Assistant CONTENTS   ACKNOWLEDGMENTS     EXECUTIVE SUMMARY   1. INTRODUCTION     Retirement Income Security 11   The Report 14 2 CONSIDERATIONS IN RETIREMENT INCOME PROJECTIONS     The Concern for Income Security 17   Near-Term Policy Options 25   Outcome Criteria 31   Challenges to Projection Modeling 34 3 KEY RESEARCH ISSUES     Employer Behavior 42   Choices of Families and Individuals 46   Health Care Costs 56   Conclusion 57 4 DATA NEEDS     The Lesson from Health Care Reform 62   Dimensions of Databases 68   Panel Data on Individuals 70   Data on Employers 96   Expanded Use of Administrative Data 120   Data Validation 124 5 DEVELOPMENT OF PROJECT MODELS     Current Models and Their Uses 133   Looking to the Future 140   Validation 153   Near-Term Modeling Strategies 159 6 FURTHERING COORDINATION FOR DATA COLLECTION, RESEARCH, AND MODELING     Organizational Issues 165   Coordination Mechanisms 167   Involving the Private Sector and Academia 170 APPENDICES   CONTENTS, ASSESSING KNOWLEDGE OF RETIREMENT BEHAVIOR     RETIREMENT-INCOME-RELATED DATA SETS     EXAMPLES OF RETIREMENT-INCOME-RELATED PROJECTION METHODS     MAJOR ASPECTS OF DYNASIM2 AND PRISM   REFERENCES BIOGRAPHICAL SKETCHES OF PANEL MEMBERS AND STAFF INDEX