Background Paper: Evaluating Benefit Guarantees in Social Security

Some proposals to replace a part of the Social Security system with individual accounts include a guarantee that beneficiaries will receive a minimum return on those accounts, usually expressed in terms of their currently scheduled benefit. The Congressional Budget Office (CBO) has developed the capacity to analyze the value of such guarantees and their potential cost to future taxpayers. This background paper compares two approaches for analyzing benefit guarantees, referred to as