Kotlikoff: What Does Social Security Really Cost?

Answer: Almost twice as much as the government claims. Using the conventional method used by the Trustees, the present value of our unfunded Social Security liability is $25 trillion – more that the entire U.S. gross domestic product. But this measure ignores the fact that our obligation to retirees is actually quite risky – owing to uncertainty about future wage growth and future rates of inflation. Using market based measures to evaluate this uncertainly, economist Laurence Kotlikoff and his colleagues estimate that the true liability is $48 trillion. More