DYNASIM3 is a dynamic microsimulation model designed to analyze the long-run distributional consequences of retirement and aging issues. Starting with a representative sample of individuals and families, the model “ages” the data year by year, simulating such demographic events as births, deaths, marriages and divorces, and such economic events as labor force participation, earnings, hours of work, disability onset, and retirement. The model simulates Social Security coverage and benefits, as well as pension coverage and participation, and benefit payments and pension assets. It also simulates home and financial assets, health status, living arrangements, and income from non-spouse family members (coresidents). In addition, it calculates SSI eligibility, participation, and benefits The DYNASIM3 model has been used recently to simulate how potential changes to Social Security will affect the future retirement benefits of at-risk populations, such as elderly widows and widowers, and certain divorcees and spouses (Favreault and Sammartino 2002; Favreault, Sammartino, and Steuerle 2002). The Institute has also used it to explore annuitization effects under a Social Security system with personal accounts (Uccello et al. 2003), potential retirement consequences of rapid work effort growth among low-wage, single mothers in the late 1990s (Johnson, Favreault, and Goldwyn 2003), and the implications of recent earnings inequality patterns for future retirement income (Smith 2003). Ongoing work examines personal account proposals and how they would intersect with current patterns of wealth accumulation and retirement preparedness (Butrica and Uccello forthcoming).
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