TY - RPRT T1 - Distributional Effects of Means Testing Social Security: An Exploratory Analysis Y1 - 2016 A1 - Alan L Gustman A1 - Thomas L. Steinmeier A1 - N. Tabatabai KW - Net Worth and Assets KW - Public Policy KW - Social Security AB - This paper examines the distributional implications of introducing additional means testing of Social Security benefits where proceeds are used to help balance Social Security's finances. Benefits of the top quarter of households ranked according to the relevant measure of means are reduced using a modified version of the Social Security Windfall Elimination Provision (WEP). The replacement rate in the first bracket of the benefit formula, determining the Primary Insurance Amount (PIA), would be reduced from 90 percent to 40 percent of Average Indexed Monthly Earnings (AIME). Four measures of means are considered: total wealth; an annualized measure of AIME; the wealth value of pensions; and a measure of average indexed lifetime W2 earnings. The empirical analysis is based on data from the Health and Retirement Study. These means tests would reduce total lifetime household benefits by 7 to 9 percentage points. We find that the basis for means testing Social Security makes a substantial difference as to which households have their benefits reduced, and that different means tests may have different effects on the benefits of families in similar circumstance. We also find that the measure of means used to evaluate the effects of a means test makes a considerable difference as to how one would view the effects of the means test on the distribution of benefits. JF - NBER Working Paper Series PB - Cambridge, MA, National Bureau of Economic Research U4 - social Security/Public Policy/means testing/wealth/pension wealth ER -