AFSCME Information Highway

Source: Jae Song, Joyce Manchester, Congressional Budget Office, Working Paper Series, 2008-4, May 2008

Two changes have been made recently to rules governing the Social Security program:

The retirement earnings test was eliminated in 2000 for people aged 65-69, and the full retirement age (FRA) for people born in 1938 or later was scheduled to gradually increase in two-month increments until reaching age 67.

This paper examines changes in the age at which people claim Social Security retirement benefits in response to those changes. Data comes from a 1 percent sample of administrative data from the Social Security Administration for 1997 to 2007.

Posted by Info Center at 10:08 AM in Retirement | Social Security | Permalink

Source: Congressional Research Service (via OpenCRS)

Social Security has significantly reduced elderly poverty. The elderly poverty rate has fallen from 35% in 1959 to an all-time low of 9% in 2006, in large part because of Social Security. If Social Security benefits did not exist, an estimated 44% the elderly would be poor today assuming no changes in behavior. The Supplemental Security Income (SSI) program, also provides benefits to the poorest elderly, many of whom do not qualify for Social Security benefits. However, despite these programs, about 3.4 million elderly individuals remained in poverty in 2006.

The Social Security system faces a long-term financing problem. The Social Security Trustees project cash-flow deficits beginning in 2017 and trust fund insolvency in 2041. Many recent proposals to improve system solvency would reduce Social Security benefits in the future. Benefit reductions could affect the low income elderly, many of whom rely on Social Security benefits for almost all of their income. Such potential benefit reductions could lead to higher rates of poverty among the elderly compared to those projected under the current benefit formula. Because the low-income elderly are especially vulnerable to benefit reductions, many recent Social Security reform proposals have included minimum benefits or other provisions that would mitigate the effect of benefit cuts on the elderly poor.

This report analyzes the projected effects of four possible approaches to mitigating the effects of Social Security benefit reductions on elderly poverty in 2042, the first full year of projected trust fund insolvency. The options are compared to a payable baseline, which assumes current-law benefits would need to be cut across the board to balance Social Security's annual income and spending at the point of insolvency. The four options examined are (1) a poverty-line Social Security minimum benefit; (2) a sliding-scale Social Security minimum benefit; (3) a povertyline SSI benefit; and (4) a poverty-line SSI benefit with liberalized eligibility.

Full Report (PDF; 184 KB)

Posted by William at 8:19 AM in Social Security | Permalink

Source: Social Security Administration

News release: The Social Security Board of Trustees today released its annual report on the financial health of the Social Security Trust Funds. While the key dates for program costs exceeding tax revenues and Trust Fund exhaustion remain unchanged, the 2008 Trustees Report shows improvement in the projected long-term financial status of the Social Security program from last year -- particularly in the latter half of the long-range projection period. This improvement is principally the result of methodological changes for projecting certain aspects of immigration.

At the end of 2007, almost 50 million people were receiving benefits: 34 million retired workers and their dependents, 6 million survivors of deceased workers, and 9 million disabled workers and their dependents. Dur¬ing the year an estimated 163 million people had earnings covered by Social Security and paid payroll taxes. Total benefits paid in 2007 were $585 bil¬lion. Income was $785 billion, and assets held in special issue U.S. Treasury securities grew to $2.2 trillion.

Posted by Info Center at 9:21 AM in Social Security | Permalink

Source: Center for Retirement Research at Boston College

The Trustees of the Social Security system have just issued the 2008 projections for the system over the next 75 years. The report contains two surprises. First, the 75-year deficit dropped to 1.70 percent of taxable payrolls from the roughly 2 percent it has been for the last 14 years. The decline was driven primarily by a change in the way Social Security projects immigration. Although the Trustees still project that the trust fund will be exhausted in 2041, the improved outlook enables scheduled payroll taxes to cover more than three-quarters of promised benefits after that point. The second noteworthy difference between this report and earlier ones is that it has not been signed by any public trustees. But this omission reflects a failure with the political process, not with the program itself.

Full Report (PDF; 105 KB)

Posted by Info Center at 8:56 AM in Social Security | Permalink

Source: Joni Lavery and Virginia P. Reno, National Academy of Social Insurance, no. 27, February 2008

From the press release:
While Social Security is best known as a retirement program, it is also irreplaceable life and disability insurance for young families, according to a new report released today by the non-partisan National Academy of Social Insurance (NASI).

About 6.5 million children under 18 - or nearly 9 percent of all U.S. children - received part of their family income from Social Security in 2005. They include 3.1 million children who themselves receive benefits as dependents of a deceased, disabled, or retired parent, and an estimated 3.4 million other children who do not themselves receive Social Security, but live with relatives who do.
See also:
▪ Summary
▪ Fact Sheet

Posted by Info Center at 5:50 PM in Children | Social Security | Permalink

Source: National Academy of Social Insurance, February 2008

From press release:
For most Americans, the value of their Social Security is the biggest accumulation of dollars they will take into retirement. In fact, for two-thirds of recipients over the age of 65, Social Security is more than half of their income during retirement, according to a new report released today by the non-partisan National Academy of Social Insurance (NASI).

The report, Social Security: An Essential Asset and Insurance Protection for All, details Social Security's vital role in safeguarding Americans families and retirees, with a particular focus on groups at high risk of having inadequate incomes - older women, African American families, and the Latino community. The report synthesizes findings from research and outreach activities by twelve organizations funded by the Ford Foundation.

Posted by Info Center at 4:35 PM in Social Security | Permalink

Source: American Bar Association - Section of Taxation News Quarterly (via SSRN)

In 2008, the oldest of 78 million baby boomers will celebrate their 62nd birthdays. Before they blow out their birthday candles, they will have considered and likely decided whether to elect to take early Social Security retirement benefits (SSRBs). Recent and evolving changes in the normal retirement age under Social Security, Medicare premiums and increased exposure to income tax costs have reduced the net cash flow many senior boomers will enjoy from SSRBs. Because of the overall lack of transparency in the Social Security benefits formula and the complex interplay of continued work, Medicare, taxes, and the various timing-options, many boomers are unable to make informed decisions about critical retirement matters. This article presents these issues to assist in making informed retirement decisions.

Posted by Info Center at 11:25 AM in Social Security | Permalink

Source: U.S. Government Accountability Office

There are no easy answers to the difficulties of equalizing Social Security's treatment of covered workers and noncovered public employees. About one-fourth of public employees primarily state and local government workers are not covered by Social Security and do not pay Social Security taxes on their government earnings. Nevertheless, these workers may still be eligible for Social Security benefits through their spouses' or their own earnings from other covered employment. To address concerns with how noncovered workers are treated compared with covered workers, Social Security has provisions in place to take noncovered employment into account and reduce Social Security benefits for public employees.

Report
Highlights

Posted by Info Center at 2:40 PM in Pensions | Social Security | Permalink

Source: U.S. Department of the Treasury, Issue Brief no. 2, 2007

Treasury today released the second in a series of papers on Social Security. Issue brief No. 2 entitled "Social Security Reform: A Framework for Analysis" discusses a top-down framework for designing and evaluating Social Security reform plans.
See also:
Issue Brief No. 1 Social Security Reform: The Nature of the Problem

Posted by Info Center at 6:58 PM in Social Security | Permalink

Source: U.S. Census Bureau, Press release, CB07-141, October 9, 2007

From the press release:
Social Security, Medicare and Medicaid accounted for more than $1 trillion of the $2.3 trillion the federal government spent in 2005, according to the U.S. Census Bureau, which publishes the only consolidated source of data on the geographic distribution of federal expenditures.

The Consolidated Federal Funds Report for Fiscal Year 2005 is a presentation of data on most domestic spending by the federal government for state and county areas of the United States, including the District of Columbia and U.S. outlying areas. The data include expenditures for the Defense Department and the Department of Homeland Security.

The report covers direct payments, grants, procurement awards, and salaries and wages by federal agency and program. The report does not include expenditures for selected intelligence agencies, international payments, foreign aid and interest on the federal debt.
• Direct to Detailed Tables
• Federal Aid to States for Fiscal Year 2005

Posted by Info Center at 4:48 PM in Budget – United States | Health Care | Social Security | Permalink

Source: Angela Harper, Social Security Administration, SSA Publication No. 13-11785, September 2007

Fast Facts & Figures answers the most frequently asked questions about the programs SSA administers. It highlights basic program data for the Social Security (retirement, survivors, and disability) and Supplemental Security Income programs.

See also:
• Annual Statistical Supplement, 2007 (forthcoming December 2007)

Posted by Info Center at 5:25 PM in Social Security | Statistics | Permalink

Source: William A. Galston, Brookings Institution and NYU John Brademas Center, Legislating for the Future Project, September 21, 2007

From the summary:
Within days after the election, President Bush made it clear that he did not intend to play it safe on Social Security reform and other controversial issues. In a post-election press conference, he asserted, "I earned capital in this campaign, political capital, and now I intend to spend it." He was as good as his word. By mid-January of 2005, the White House had launched a huge initiative, directed by Karl Rove and Ken Mehlman, to mobilize public opinion and build public support for Social Security reform and other key presidential proposals.

The President followed up two weeks later, placing a lengthy discussion of Social Security at the heart of his 2005 State of the Union address. After citing the fiscal and demographic pressures moving the system toward eventual bankruptcy, he listed some basic principles and then reached the nub of the matter: "As we fix Social Security, we also have the responsibility to make the system a better deal for younger workers. And the best way to reach that goal is through voluntary personal retirement accounts." This approach, the President argued, would offer younger workers a "better deal": The rate of return would be higher than in the traditional system; the accumulation could be passed on to children and grandchildren; and "best of all, the money in this account is yours, and the government can never take it away."
...
By early summer the initiative was on life support, with congressional Democrats uniformly opposed and Republicans in disarray. After Hurricane Katrina inundated what remained of the President's support, congressional leaders quietly pulled the plug. By October, even the President had to acknowledge that his effort had failed.

Posted by Info Center at 5:00 PM in Social Security | Permalink

Source: U.S. Treasury, September 24, 2007

The Treasury released today the first in a series of issue briefs that will discuss Social Security reform, focusing on the nature of the problem and those aspects of reform that have broad support.
• Paulson Statement on Social Security Reform, September 24, 2007
• Issue Brief No. 1 Social Security Reform: The Nature of the Problem, September 24, 2007

Posted by Info Center at 2:46 PM in Social Security | Permalink

Source: National Partnership for Women and Families

Social Security was established nearly 70 years ago to provide a critical safety net to protect our most vulnerable citizens. Now, citing a fictitious "crisis," President Bush wants to overhaul Social Security and change the way benefits are calculated and distributed, including having workers invest part of their contributions into private accounts. These proposals will severely undermine the Social Security safety net and disproportionately harm women and minorities. Social Security - the guaranteed foundation for most seniors' retirement - must be strengthened, not whittled away.

The Social Security reform plan that President Bush is promoting would exacerbate those problems by diverting one-third of a worker's Social Security contributions to private accounts. The result would be lower guaranteed benefits for ALL future retirees, regardless of whether they open individual private accounts. Lower benefits would cause great harm to women, who are much more likely than men to depend on Social Security's guaranteed benefits to avoid poverty.

See also:
National Partnership for Women and Families: Social Security Page

Posted by Info Center at 5:01 PM in Social Security | Working Women | Permalink

Source: Congressional Research Service (via OpenCRS)

American taxpayers spend nearly $100 million a year to fund the Congressional Research Service, a "think tank" that provides reports to members of Congress on a variety of topics relevant to current political events. Yet, these reports are not made available to the public in a way that they can be easily obtained. A project of the Center for Democracy & Technology, Open CRS provides citizens access to CRS Reports that are already in the public domain and encourages Congress to provide public access to all CRS Reports.
• Integrating Medicare and Medicaid Services Through Managed Care
• Medicare Prescription Drug Benefit: Low-Income Provisions
• Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)
• Social Security Administration: Administrative Budget Issues
• Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI): Proposed Changes to the Disability Determination and Appeals Processes
• Supplemental Security Income (SSI): Accounts Not Counted As Resources
• Tax Benefits for Health Insurance and Expenses: Overview of Current Law and Legislation

Posted by Info Center at 11:26 AM in Health Care | Social Security | Taxation | Permalink

Source: Laurence J. Kotlikoff, Ben Marx, and Pietro Rizza, National Center for Policy Analysis, NCPA Policy Report No. 301, August 2007

From Policy Digest:
Even the wealthy depend upon Social Security for much of their consumption after they quit working, according to a new report from the National Center for Policy Analysis (NCPA).
Consider:
• Social Security accounts for virtually all of the discretionary consumption of households with preretirement incomes of less than $50,000 a year or $25,000 for singles.
• Social Security accounts for about one-third of all discretionary consumption for the highest-income households — couples earning $500,000 or singles earning $250,000 prior to retirement.

A primary goal of financial planning is to maintain a consistent standard of living during a person’s lifetime. If Social Security were abolished tomorrow, all retirees would experience an immediate reduction in their consumption. If younger workers were notified in advance, they could adjust their saving and spending habits today to avoid abrupt changes in their standard of living upon retirement. Yet only the highest income workers have the ability to adjust so as to completely smooth their consumption across their lifetime. Because low- and middle-income workers are constrained by current obligations they cannot completely adjust.

Posted by Info Center at 11:27 AM in Social Security | Permalink

Source: American Academy of Actuaries, Issue Brief, June 2007

From the press release:
Gender-related differences in the American work culture have resulted in lower Social Security benefits for women, the American Academy of Actuaries Social Insurance Committee said in a new issue brief, “Women and Social Security.” The actuaries cite differences in wage histories, greater probabilities of outliving a spouse and being single in retirement, and the greater likelihood for women to be temporarily out of the workforce, among the differences that cause their benefits to be smaller even though calculated using gender-neutral rules.

The Academy’s issue brief also determines that women, who on average are more likely to have insufficient income in retirement, are in turn more dependent on Social Security. In fact more than 40 percent of females aged 62 or older rely on Social Security for more than 90 percent of their income, as opposed to 28 percent for males aged 62 or older. Additionally poverty rates for single women aged 65 or older are among the highest of any subgroup in the United States.

Posted by Info Center at 5:01 PM in Social Security | Permalink

Source: Christopher Tamborini, Congressional Research Service, Order Code RL34006, May 17, 2007

Over the past few years, there has been intense debate about Social Security reform in the United States. A number of options, ranging from changing the benefit formula to adding individual accounts, has been discussed. The policy debate takes place against the backdrop of an aging population, rising longevity, and relatively low fertility rates, which pose long-range financial challenges to the Social Security system. According to the 2007 Social Security Trustees Report's intermediate assumptions, the Social Security trust funds are projected to experience cash-flow deficits in 2017 and to become exhausted in 2041.

As policymakers consider how to address Social Security's financing challenges, efforts of Social Security reform across the world have gained attention. One of the most oft-cited international cases of reform is Chile. Chile initiated sweeping retirement reforms in 1981 that replaced a state-run, pay-as-you-go defined benefit retirement system with a private, mandatory system of individual retirement accounts where benefits are dependent on the account balance. As a pioneer of individual retirement accounts, Chile has become a case study of pension reform around the world. Although Chile's experience is not directly comparable to the situation in the United States because of large differences between the countries, knowledge of the case may be useful for American policymakers.

Posted by Info Center at 3:42 PM in Retirement | Social Security | Permalink