Source: Congressional Budget Office, publication 51443, June 2016
From the summary:
The Social Security Disability Insurance (DI) program pays cash benefits to nonelderly adults who have worked in the past but are judged to be unable to continue performing substantial work because of a disability. The program also pays benefits to some of those adults’ dependents. In 2015, the DI program paid a total of $143 billion, or about 0.8 percent of gross domestic product (GDP), in benefits to almost 9 million disabled beneficiaries and about 2 million of those beneficiaries’ spouses and children. Disabled beneficiaries generally are entitled to Medicare after a two-year waiting period; the cost of those benefits in 2015 was around $85 billion, or about 0.5 percent of GDP, CBO estimates.
How Have Enrollment and Spending Changed Since 1970?
Between 1970 and 2014, the share of working-age people who receive DI benefits as a result of their own disability and whose DI benefits are calculated on the basis of their own disability and work history more than tripled, increasing from 1.3 percent to 4.5 percent, before declining slightly in 2015. The increase in DI beneficiaries since 1970 is attributable to changes in the characteristics of the working-age population, in federal policy, and in employment…..
Source: Alicia H. Munnell, Center for Retirement Research at Boston College, IB#16-10, June 2016
The brief’s key findings are:
– The 2016 Trustees Report shows virtually no change:
– Social Security’s 75-year deficit is 2.66 percent of payroll, just a hair below the 2015 projection.
– The deficit as a percentage of GDP remains at about 1 percent.
– Trust fund exhaustion is still 2034, after which payroll taxes still cover about three quarters of promised benefits.
– The shortfall is manageable, but action should be taken soon to restore confidence in the program and give people time to adjust to needed changes.
– Also of note, the Bipartisan Budget Act of 2015 did two things:
– It reallocated payroll taxes to extend the life of the DI trust fund.
– It helpfully eliminated claiming loopholes, which had a small positive effect on program finances.
Source: Steven A. Sass, Center for Retirement Research at Boston College, IB#16-9, June 2016
The brief’s key findings are:
Social Security’s spousal and survivor (“family”) benefits were designed in the 1930s for a one-earner married couple. Today, family benefits contribute less to retirement income because most married women work, and many households are headed by single mothers. Single mothers who were never married are not eligible for family benefits, nor are divorced women who were married less than 10 years. These women often find it harder to earn an adequate Social Security benefit on their own, as their work opportunities are constrained by child-rearing duties. Policy experts have suggested ways to help: Earnings sharing among married couples could raise benefits for women who later become divorced. Caregiving credits could help mothers regardless of their marital status.
Source: Public Policy & Aging Report, Volume 26, Issue 2, 2016
From the introduction:
….[M]ost of the attention surrounding “making an issue of income inequality” has focused on the hardships facing working-age and younger people as they struggle to put food on the table and find a place for themselves in the world of work. Receiving less attention in these analyses is the fate of millions of older adults who struggle in both similar and different ways from inequality’s effects. This absence results in part from the cross-sectional view commonly taken of older people: They are there, however they got there, and “God bless them.” But beyond this homogenizing stereotype is the more pernicious and misleading assumption that government programs—Social Security and Medicare in particular—have a major leveling effect on well-being in old age. That these programs are universal—with all the salutary consequences associated with that status—is conflated with assumptions about cross-class redistribution within them of which there is in fact very little. ….
Cumulative Advantage and Disadvantage: Across the Life Course, Across Generations
Robert B. Hudson
Late-Life Inequality in the Second Gilded Age: Policy Choices in a New Context
Frames Matter: Aging Policies and Social Disparities
Renée L. Beard and John B. Williamson
Societal Legacies of Risk and Protection in the Reproduction of Health Disparities
Race, Gender, and Senior Economic Well-Being: How Financial Vulnerability Over the Life Course Shapes Retirement for Older Women of Color
Laura Sullivan and Tatjana Meschede
Cumulative Advantage and Retirement Security: What Does the Future Hold?
Richard W. Johnson
Unequal Aging: Lessons From Inequality’s End Game
Corey M. Abramson
Source: Daniel Fetter, Lee M. Lockwood, National Bureau of Economic Research (NBER), NBER Working Paper No. w22132, March 2016
From the abstract:
Many major government programs transfer resources to older people and implicitly or explicitly tax their labor. In this paper, we shed new light on the labor supply effects of such programs by investigating the Old Age Assistance Program (OAA), a means-tested and state-administered pension program created by the Social Security Act of 1935. Using newly available Census data on the entire US population in 1940, we exploit the large differences in OAA programs across states to estimate the labor supply effects of OAA. Our estimates imply that OAA reduced the labor force participation rate among men aged 65-74 by 5.7 percentage points, nearly half of its 1930-40 decline. Estimating a structural model of labor supply, we find that the welfare costs to recipients of the high tax rates implicit in OAA’s earnings test were quite small. Predictions based on our reduced-form estimates and our estimated model both suggest that Social Security could account for at least half of the large decline in late-life work from 1940 to 1960.
Source: William R. Morton, Congressional Research Service, CRS Report, R41716, April 8, 2016
…This report provides an overview of SSA’s mandatory spending but focuses primarily on discretionary appropriations for the agency’s administrative expenses. …
Source: Carmen Solomon-Fears, Congressional Research Service, CRS Report, R44423, March 21, 2016
The Child Support Enforcement (CSE) program was enacted in 1975 as a federal-state program (Title IV-D of the Social Security Act, P.L. 93-647). It is intended to help strengthen families by securing financial support for children from their noncustodial parent on a consistent and continuing basis and by helping some of these families to remain self-sufficient and off public assistance. Child support payments enable parents who do not live with their children to fulfill their financial responsibility to them by contributing to the payment of childrearing costs. …..
Source: Kathryn Anne Edwards, Anna Turner, Alexander Hertel-Fernandez, Economic Policy Institute and the National Academy of Social Insurance, January 2016
From the abstract:
UPDATED! Social Security is the nation’s most successful anti-poverty program and it remains a fundamental pillar of the American economy—one that is critical to the long-term economic security of today’s young people. A Young Person’s Guide to Social Security, Third Edition (PDF) released by the Economic Policy Institute and the National Academy of Social Insurance, gives young adults the information they need to participate in debates about Social Security’s future. The 60-page guide is written by young authors for students and young workers and explains why Social Security is not in grave danger as oft-reported.
Source: Alison Shelton, AARP, Public Policy Institute, Fact Sheet, March 2016
Social Security is especially important for women ages 65 and older because they are less likely than are older men to have family income (including their own income) from pensions, savings, or other sources. Moreover, three key features of the Social Security program — progressivity of the benefit formula, guaranteed benefits for life, and inflation-adjusted benefits—are particularly beneficial for women.
Source: Raimond Maurer, Olivia S. Mitchell, Ralph Rogalla, and Tatjana Schimetschek, Wharton School of the University of Pennsylvania, Public Policy Initiative, Issue Brief: Volume 3, Number 9, November 2015
From the summary:
• Political debate has focused on the question of whether Social Security solvency should be achieved by larger benefit cuts or higher taxes, which in effect asks which people—current or future generations—should bear the greater burden of fixing the system.
• But new research reframes this debate, offering a budget-neutral, actuarially fair lump sum payment, instead of the current delayed retirement credit, as a way to encourage people to delay claiming their Social Security benefits and work longer.
• Under one of the lump sum alternatives presented here, survey participants indicated a willingness to delay claiming Social Security by up to eight months, on average, compared to the status quo, and to continue working for four of them.
• Delayed claiming would mean additional months or years of Social Security payroll tax contributions, which could modestly improve the program’s solvency. Other benefits are possible as well: improved physical and mental health among the elderly from extended labor force participation, which could reduce the strain on health care programs like Medicare and Medicaid and help offset the macroeconomic costs of an aging population.