Research and Analysis by Title
This article introduces the 2006 Earnings Public-Use File (EPUF), a data file containing earnings records for individuals drawn from a 1-percent sample of all Social Security numbers issued before January 2007. The EPUF contains selected demographic and earnings information for 4.3 million individuals. It provides aggregate earnings data for 1937 to 1950 and annual earnings data for 1951 to 2006.
Organizations involved in statistical surveys of human subjects face two important and competing challenges: protecting data confidentiality while maximizing data accessibility to potential researchers. This note examines how the Health and Retirement Study (HRS), conducted by the Institute for Social Research of the University of Michigan, attempts to balance data confidentiality with the desire to broaden the pool of potential data users. Current HRS procedures are summarized and compared with those of organizations with similar programs, and potential ways to expand HRS use without compromising confidentiality are discussed.
The Accuracy of Survey-Reported Marital Status: Evidence from Survey Records Matched to Social Security Records
Many researchers have concluded that, in surveys, divorced persons often fail to report accurate marital information. In this paper, I revisit this issue using a new source of data—surveys exactly matched to Social Security data. I find that divorced persons frequently misreport their marital status, but there is evidence that the misreporting is unintentional. A discussion of possible improvements in surveys is presented. Implications for the study of differential mortality and the study of poverty among aged women are discussed.
Given immigration's recent resurgence as an important demographic fact in the U.S. economy, U.S. policy modelers are just beginning to grapple with how best to integrate immigrants into policy models. Building on the research reviewed in the first article of this series, this article puts forth a conceptual basis for incorporating immigration into a key type of policy model—microsimulation—with a focus on the projection of immigrant earnings.
An outline of the current initiatives—for example, the implementation of the Ticket to Work program and various demonstration projects designed to promote work resumption—undertaken to address the challenges facing SSA's disability programs. The article also contains a summary of the agency's efforts to enhance the efficiency of its administration of the disability programs, including the establishment of an eDib electronic disability folder and the creation of a workgroup to consider ideas for simplifying the SSI program.
It is well-known that for most purposes income size distribution data collected in household surveys are far from ideal. The problems with those data can be separated into two types: the data items that are collected, and the accuracy of the data collected. Usually, although there are important exceptions, the income data collected are confined to cash income before taxes, thus ignoring the effects of both taxes and noncash income of all types. Also, the income estimates usually are for one year, which often is not the best accounting period for analysis. Furthermore, there usually is a lack of adequate detail by income type, and the data ordinarily are not sufficiently detailed to adjust for changes in the composition of the family unit during the income accounting period.
During its 75-year history, the Social Security Administration (SSA) has faced many administrative challenges. This article depicts some of those challenges—involving legislative demands, staffing and workloads, infrastructure and technology, logistics and procedures, emergency response operations, and other matters—and the steps that SSA has taken to deal with them.
Advisory Council on Social Security: Reports on Permanent and Total Disability Insurance and on Public Assistance
AFDC: Good Cause Claims for Refusing to Cooperate in Establishing Paternity or Securing Child Support
African Americans: Description of Social Security and Supplemental Security Income Participation and Benefit Levels Using the American Community Survey
The authors use American Community Survey (ACS) data to compare Social Security and Supplemental Security Income program participation and benefit levels of African Americans with those of the general population. The ACS data show that African Americans are more likely to be Supplemental Security Income recipients, and less likely to be Social Security beneficiaries. Higher rates of poverty, disability, and mortality among African Americans mean that they are also more likely to rely on Social Security survivor and disability benefits than are other beneficiaries.
To be awarded Disability Insurance benefits, an individual must have an objectively determinable, severe medical condition or impairment that, according to Social Security regulations, is serious enough that it can be presumed to keep the individual from working. We know, however, that some people who have medical conditions serious enough to qualify them for disability benefits are nevertheless able to continue working, while others who consider themselves unable to work do not have a serious enough impairment to qualify them for benefits. Whether or not a seriously impaired individual files for Social Security Disability Insurance benefits (SSDI) will depend, in part, on his or her own self-assessment of his ability to work, i.e., whether he considers himself to be severely disabled. This self-assessment depends upon many factors in addition to the actual severity of the individual's medical condition. These factors, therefore, become important elements in the decision to apply for SSDI benefits. This report examines how the relationship between measures of actual individual functional capacity and individual self-assessments of work capacity vary by age and other important job-related attributes.
This article describes the outcomes of the redetermination of Supplemental Security Income (SSI) eligibility when a child recipient reaches age 18. Statistics on the characteristics of youth whose eligibility is redetermined are presented using 8 years of administrative data, and the relationship between these characteristics and both an initial cessation decision and a successful appeal or reapplication for SSI are discussed.
Aged Beneficiaries of Old-Age and Survivors Insurance: Highlights on Health Insurance and Hospitalization Utilization, 1957 Survey
Aid to Families With Dependent Children: Initial Findings of the 1961 Report on the Characteristics of Recipients
Replacement rates are common and useful tools used by individuals and policy analysts to plan for retirement and assess the sufficiency of Social Security benefits and overall retirement income. Because the calculation and meaning of replacement rates differs depending on the definition of preretirement earnings, this article examines four alternative measures: final preretirement earnings, constant income payable from the present value of lifetime earnings (PV payment), wage-indexed average of lifetime earnings, and inflation-adjusted average of lifetime earnings (CPI average). The article also calculates replacement rates for Social Security beneficiaries aged 64–66 in 2005.
Most analyses of economic status use only income as the measure of resources. It is clear, however, that wealth also plays an important role in economic well-being. The existence of both income and asset tests for eligibility purposes in several government transfer programs (e.g., Supplemental Security Income, Aid to Families with Dependent Children, food stamps) suggests the importance of both wealth and income. Units of the same age, income, and needs are not equally well off if they have different amounts of wealth. A fully satisfactory way of taking differences in wealth into account in a combined income-wealth measure is not available. Particularly controversial is the comparison of different age groups when such measures are used. This exploratory paper examines the use of income-wealth measures for the analysis of the distribution of economic well-being for age groups in the current period.
One aspect of the current debate about changing the Social Security program concerns how new rules might affect elderly women, many of whom have low income. This paper examines three possible changes: (1) a reduction in spousal benefits combined with a change in the computation of the survivor benefit, (2) a redefined minimum benefit, and (3) a 5 percent increase in benefits for persons aged 80 or older. The paper assesses the cost, distributional consequences, and antipoverty impact of each option.
This paper presents analysis of the distributional and other effects of a change from the existing income tax exclusion of Social Security benefits to the proposed 50 percent inclusion. In emphasizing the differences between these two policies, very limited attention will be given to other policy alternatives.
As a means-tested program, the Supplemental Security Income program considers a recipient's income from wages and other sources when determining eligibility and the monthly benefit amount. This study examines annual earnings for a sample of Supplemental Security Income recipients and, in the case of child recipients, their spouses and parents to evaluate the feasibility of using average annual wages in place of monthly wages when determining benefit amounts. The data show substantial variation in earnings from one year to the next. The results do not point to any clear distinctions in wage patterns among recipients or ineligible spouses and parents that would make any one group a better candidate for estimating and verifying wages on an annual basis.
This article examines poverty among persons aged 65 or older under experimental measures, which are based on a 1995 report released by the National Academy of Sciences. When compared with the official measure, the experimental measure produces higher poverty rates for all groups and narrower differences in poverty rates across groups.
Assessing the Performance of Life-Cycle Portfolio Allocation Strategies for Retirement Saving: A Simulation Study
The investment performance of life-cycle portfolio allocation strategies is evaluated using a stochastic simulation based on historical asset returns during 1926–2008. Lifetime contribution streams to the accounts are determined using the actual earnings histories of 13,000 workers born in 1915–1942. The results are compared with those of four alternative strategies that vary in terms of investor exposure to stock and bond market risk.
Of particular interest in this article is the relationship between firm size and pension coverage and participation because small businesses tend to be less likely to offer retirement benefits to their employees than do large businesses. This relationship is particularly important given the current administration's retirement proposals to create automatic individual retirement accounts. Obviously, accurate information is important not only in formulating retirement income security policies that target workers without retirement plan coverage, but also to assess the impact of such policies on workers' retirement plan participation.
This paper discusses what is known about the economic status of the aged. Numerous complexities involved in the assessment of the economic status of the aged are discussed. Compared with most other recent assessments, this study shows a less favorable status for the aged relative to other age groups. The focus is on an examination of detailed age groups, rather than summary aged and nonaged groups, thus providing a more complete picture of age differences. More than most other assessments, this study stresses uncertainty about the relative status of the aged and emphasizes what we do not know. The need for better adjustments for differences in needs among age and other subgroups of the population is stressed. The need for consistency between the definition of resources and the specification of needs is also emphasized. The vulnerability of the aged to economic risks is discussed.
Assets and Net Worth of Old-Age and Survivors Insurance Beneficiaries: Highlights From Preliminary Data, 1957 Survey
In this article we explore the extent of and reasons for attrition in the New Beneficiary Survey (NBS) between the first interview in 1982 and the followup interview in 1991. We examine a variety of potential determinants of attrition, separating the probability of attrition due to death from a refusal to be interviewed. Because the NBS sample is drawn from and linked to Social Security administrative records, information on mortality as a cause of attrition is exact. Hence, we are able to examine differences in the patterns and predictors of attrition due to these two causes of attrition and differences between attrition among retired and disabled workers.
The majority of research dealing with the retirement decision has focused on the health and wealth aspects of retirement. Research in the areas of judgment and decision making and behavioral economics suggests that there may be a number of behavioral factors that influence the retirement decision as well. This review highlights such factors and offers a unique perspective on potential determinants of retirement behavior, including anchoring and framing effects, affective forecasting, hyperbolic discounting, and the planning fallacy. The author describes findings from previous research, as well as draws novel connections between existing decision-making research and the retirement decision.
Benefit Adequacy Among Elderly Social Security Retired-Worker Beneficiaries and the SSI Federal Benefit Rate
The federal benefit rate (FBR) of the Supplemental Security Income program provides an inflation-indexed income guarantee for aged and disabled people with low assets. Some consider the FBR as an attractive measure of Social Security benefit adequacy. Others propose the FBR as an administratively simple, well-targeted minimum Social Security benefit. However, these claims have not been empirically tested. Using microdata from the Survey of Income and Program Participation, this article finds that the FBR is an imprecise measure of benefit adequacy; it incorrectly identifies as economically vulnerable many who are not poor, and disregards some who are poor. The reason for this is that the FBR-level benefit threshold of adequacy considers the Social Security benefit in isolation and ignores the family consumption unit. The FBR would provide an administratively simple but poorly targeted foundation for a minimum Social Security benefit. The empirical estimates quantify the substantial tradeoffs between administrative simplicity and target effectiveness.
This article summarizes several different methods used to measure the adequacy of wage replacement in state workers' compensation systems in the United States. Empirical research casts serious doubt on benefit adequacy, especially in the case of more serious disabilities.
[Errata: The electronic versions of this article that were originally posted contained incorrect labels on the lines in Chart 3. The labels have been updated in the electronic versions and are correct in the print publication.]
Using data from the Health and Retirement Study (HRS) and linked administrative records, we explore differences in old-age benefits between men and women attributable to differences in length of work life and pay. We find that most women are fully insured for Social Security purposes, but those who are not would have to work substantially more to become eligible. Among those who are eligible, additional work would translate into only slightly higher benefits.
This article examines the experience of the Canada Pension Plan (CPP) in investing its surplus funds in equities. The CPP investment policy is viewed by some experts as a possible model for increasing the investment income of Social Security. The article discusses the key features of this policy, its implementation, and results to date.
Canada's Public Pensions System is widely applauded for reducing poverty among the elderly. This article reviews benefits provided to Canada's older people and compares the Canadian system to the U.S. Supplemental Security Income program. Although Canada's system would probably be judged prohibitively expensive for the United States, the authors argue that there are nevertheless lessons to be learned from the Canadian experience.
Analysts have long considered caregiver credits, or pension credits, provided to individuals for time spent out of the workforce caring for dependent children and sick or elderly relatives, as a way to improve the adequacy of retirement benefits for women in the United States. This article examines the experiences of France, Germany, and Sweden with caregiver credits, focusing particularly on the design, administration, and cost of these programs.
Case Management at Work for SSA Disability Beneficiaries: Process Results of the Project NetWork Return-to-Work Demonstration
This article presents the results of the process analysis of the evaluation of the Project NetWork demonstration, a Federal demonstration undertaken by the Social Security Administration (SSA) in 1991 to test alternative methods of providing rehabilitation and employment services to SSA's Disability Insurance beneficiaries and Supplemental Security Income disabled and blind applicants and recipients. The major findings are: (1) from an operational standpoint, it is feasible to expand access to vocational rehabilitation (VR) services to a broad spectrum of SSA beneficiaries, and (2) roughly similar results are achieved, in terms of client intake and provision of services, when case management services are provided by SSA staff, contracted out to State VR agencies, or contracted with private VR providers. Later evaluation reports will trace demonstration impacts on earnings and disability benefits and report the overall benefits and costs of return-to-work services for this population.
Markov models have been widely used for the analysis and prediction of shifts in population distribution over time. The point of departure for most of these analyses has been the finite state, time stationary Markov chain. The usual Markov chain model has, however, been shown to be inadequate for most social science applications.
This paper presents a particular kind of discrete time nonstationary Markov chain. Such chains will be built using a mathematical quantity called a causative matrix.
The Challenge of the 21st Century: Innovating and Adapting Social Security Systems to Economic, Social, and Demographic Changes in the English-Speaking Americas
The Social Security Programs in the United States are complex and have evolved over a long span of years. However, it is possible to categorize much of this experience into two different eras in which Social Security functioned in a distinctive environment, and a third era that is now beginning. The middle third of this century was an "age of invention," in which the programs grew rapidly under favorable social and economic conditions. Since then, the programs have experienced an "age of accommodation," in which growing financial constraints have permitted only limited changes in the program. We can look forward to an "age of maturation" in the decades to come, as most persons reaching retirement will have been covered by Social Security during their entire working careers. The declining ratio of workers to beneficiaries and a wide range of demographic and social changes will present significant challenges. The Social Security programs must change considerably to respond to the demands of a new era, and vigorous efforts to do so are underway.
This note provides data on the changes in the primary diagnosis codes of Supplemental Security Income (SSI) youth resulting from age-18 redeterminations from 2005 through 2009. It also provides information on the percent of youth continuing on or leaving the SSI program at age 18 by primary diagnosis. Although there is some movement between primary diagnosis codes, most youth remain in the same overall diagnostic group even if program eligibility ceases.
Changes in the Demographic and Economic Characteristics of SSI and DI Beneficiaries Between 1984 and 1999
During the past 20 years, legislative and judicial actions have affected Supplemental Security Income and Disability Insurance beneficiaries. This article compares important changes in demographics, income sources and amounts, and poverty status of beneficiaries of both programs between 1984 and 1999, using data from the Survey of Income and Program Participation matched to administrative data from the Social Security Administration. The average age of both groups has decreased, while their education levels increased. In 1999, Disability Insurance beneficiaries and their families relied less on Social Security, while their poverty rate remained fairly constant. The Supplemental Security Income population had a lower poverty rate, while beneficiaries were slightly more reliant on Social Security for personal income.
In recent years there has been great interest in the economic status of the aged, especially in connection with the debates about the appropriate level of Social Security benefits and Medicare coverage and financing. The economic status of the aged relative to other age groups has been of particular interest in these debates. This paper examines changes in the before-tax cash income of the aged and of other age groups from 1984 to 1989. Earlier research found that the real income of the aged rose substantially, both absolutely and relative to the income of the nonaged, from about 1970 to the mid-1980s. It is shown here that from 1984 to 1989 the real income of the aged rose slowly, and fell slightly relative to the income of the nonaged. The different rates of income growth for different aged groups are explored in this paper, with the emphasis on differences between the aged and nonaged. This paper also serves as an update of an earlier paper that contained estimates for the 1967–1984 period. The estimates in this paper generally are consistent with those presented in the earlier article.
This article assesses the role of Social Security and Supplemental Security Income (SSI) in the economic well-being of baby-boomer retirees and their predecessors. The results suggest that, similar to current retirees, Social Security will account for about two-fifths of projected income for baby-boomer retirees. On average, SSI will contribute almost nothing to total income and will be received by fewer baby-boomer retirees than by current retirees. Although baby boomers can expect higher incomes and lower poverty rates at retirement than current retirees have, they can also expect lower replacement rates. The decline in replacement rates is driven, in part, by a decline in Social Security replacement rates.
Changing Social Security Benefits to Reflect Child-Care Years: A Policy Proposal Whose Time Has Passed?
This article estimates the effects of proposals to increase the retirement benefits of women who reduce their earnings to care for young children. Using the 1990 Survey of Income and Program Participation file—exactly matched to the Social Security Administration's record of lifetime earnings—the authors present the distribution of child-care dropout years by retirement cohort and other demographic characteristics, and estimate the dollar impact of adjustments for caregiving years. The policies examined do increase the retirement benefits of some women, but the increases on average are small, are lowered with each successive retirement cohort, and benefit women from the more privileged socioeconomic groups. Thus, because the policy effects are small and will diminish in the future, the time of efficacy for these proposals has passed. Subsidizing child-care dropout years does not seem to be a well-targeted policy.
Characteristics of Disabled-Worker Beneficiaries Receiving Workers' Compensation or Public Disability Benefits Compared With Disabled-Worker Beneficiaries Without These Additional Benefits
This article uses data from the Health and Retirement Survey to examine the characteristics of individuals who are covered under integrated pension plans by comparing them with people covered by nonintegrated plans and those with no pension plan.
Employer pensions that integrate benefits with Social Security have been the focus of relatively little research. Potentially this is an important omission given the current Social Security reform debate. Since changes in Social Security benefit levels and other program characteristics can affect the benefit levels and other features of integrated pension plans, it is important to know who is covered by these plans. This paper uses data from the Health and Retirement Survey to examine the characteristics of individuals who are covered under integrated pension plans by comparing them with people covered by non-integrated plans and those with no pension plan. The results show that individuals who are female, white, non-unionized, or do not have postgraduate education are significantly more likely to be in an integrated employer pension plan.
The authors use data from the 2008 panel of the Survey of Income and Program Participation (SIPP) matched to Social Security administrative records to produce tables providing detailed information on the economic and demographic characteristics of Disability Insurance beneficiaries and Supplemental Security Income recipients in December 2010. The tables update those published in a 2008 Research and Statistics Note that used 2002 SIPP data.
Characteristics of the Longest Job for New Disabled Workers: Findings From the New Beneficiary Survey
Characteristics of the Longest Job for New Retired Workers: Findings From the New Beneficiary Survey
In determining the benefit amount for a child, the Supplemental Security Income program excludes one-third of child support payments from countable income. Legislation reauthorizing the 1996 welfare reform law contains provisions that would encourage states to allow children receiving Temporary Assistance for Needy Families (TANF) to keep more of the child support paid by an absent parent. These potential changes provide impetus to revisit the way the SSI program treats child support.
Since its inception in 1981, Chile's system of mandatory individual retirement accounts has become a model for pension reformers around the world. A March 2008 comprehensive pension reform law made major changes that address some key policy challenges including worker coverage, gender equity, pension adequacy, and administrative fees. The cornerstone of the new law sets up a basic universal pension as a supplement to the individual accounts system.
Understanding the role that 401(k) plan characteristics, such as investment choice, play in participation and employee contributions is important as more workers rely on this type of retirement plan and as proposals for Social Security solvency include individual savings plans. Using the 1992 Health and Retirement Study, this article investigates which individual and job characteristics are associated with asset choice in defined contribution plans. Investment choice is found to substantially increase contributions to such plans.
The quest for suitable indices to summarize the inequality between two groups has lagged behind the effort to obtain summary coefficients of within-group inequality. Numerous measures of within-group inequality were proposed, and their merits and shortcomings debated. Yet, apparently, at the same time, there was little exploration of alternative indices to the ratio-of-medians and ratio-of-means for measuring differences between groups.
This article uses different sources of United States data to focus on the retirement resources of women aged 55–64 in 2004, 1994, and 1984. Notable changes have occurred with women's pathways into retirement resulting from increased education and lifetime work experience. There appear marked cohort differences in potential retirement outcomes.
This article examines pension participation and nonpension net worth of two cohorts of near retirees. Particularly, the authors look at people born in 1933 through 1939 who were ages 55–61 in 1994, and the more recent cohort consisting of people of the same age in 2004 who were born in 1943 through 1949. Data are from the Health and Retirement Study, a longitudinal, nationally representative survey of older Americans.
Social Security has sizable obligations to workers who contributed and made savings decisions in the anticipation of future benefits, and the assessment of future options must explicitly account for impacts on these as well as future participants. To this end, our paper develops cohort-specific, general-equilibrium comparisons of concrete policy alternatives.
This paper develops estimates of lifetime net transfers across cohorts under the Social Security Old-Age and Survivors Insurance (OASI) program. Estimates are developed both from the perspective of individual cohorts, indicating the extent to which each cohort has received or can expect to receive its money's worth from the program, and from the perspective of the OASI program, indicating the extent of redistribution across cohorts. This paper also contrasts intercohort redistribution under the present OASI program with the redistribution that would have occurred under two counterfactual pay-as-you-go programs that incorporate different implicit standards of fairness. The data sources and techniques employed in this analysis provide a more accurate and extensive description of the treatment of different cohorts under the OASI program than has been available to date. Estimates based on past or projected data are presented for all cohorts participating in the OASI program since its inception through the cohort born in 2050.
This article reports research and analysis undertaken by a very successful collaborative, federal interagency work group on disability, convened by the Office of Management and Budget and charged with the development of a short set of disability questions for Census 2000. The process that culminated in the final disability questions on Census 2000 is described, along with a discussion of the complexities of defining and measuring disability.
This note focuses on participation in two entitlement programs that help reduce out-of-pocket expenses for low-income Medicare beneficiaries: the Qualified Medicare Beneficiary (QMB) program and the Specified Low-Income Medicare Beneficiary (SLMB) program. As of 1999, about 2.75 million eligible, noninstitutionalized individuals were not enrolled in these Medicare savings programs. The eligible nonparticipants differed substantially from the QMB and SLMB participants in that they were less likely to be Supplemental Security Income beneficiaries and more likely to be elderly, nonblack, and in relatively good health. These findings, which could help target future outreach efforts, are based on Survey of Income and Program Participation data matched with administrative records from the Social Security Administration.
Comparing Earnings Estimates from the 2006 Earnings Public-Use File and the Annual Statistical Supplement
The Social Security Administration recently released the 2006 Earnings Public-Use File (EPUF). The EPUF contains earnings information for individuals drawn from a systematic random 1-percent sample of all Social Security numbers issued before January 2007. This note presents the process of evaluating the earnings data in EPUF. It also identifies and explains four key differences between the data in EPUF and the estimates published in the Annual Statistical Supplement to the Social Security Bulletin. The note specifically compares EPUF data with Annual Statistical Supplement estimates of earnings, number of workers with earnings, median earnings by sex and age group, and percentage of workers with earnings below the taxable maximum by sex. After accounting for the expected differences, the remaining discrepancies between EPUF and Annual Statistical Supplement estimates are relatively small.
This article presents a comparison of replacement rates for employees of medium and large private establishments to replacement rates for federal employees under the Civil Service Retirement System and the Federal Employees Retirement System. This analysis shows the possibility of replacement rates exceeding 100 percent for FERS employees who contribute 6 percent of earnings to the Thrift Savings Plan over a full working career. Private-sector replacement rates were quite similar for workers with both a defined benefit and a defined contribution pension plan.
Comparison of Individual Characteristics and Death Rates of Disabled-Worker Beneficiaries Entitled in 1972 and 1985
A Comparison of the Recovery Termination Rates of Disabled-Worker Beneficiaries Entitled in 1972 and 1985
There is substantial variability in how state workers' compensation laws provide benefits to workers who have a permanent partial disability. The basic approaches used by the states can be classified into four groupings, although important differences exist within each group. Depending on the approach used, workers with similar injuries can receive substantially different amounts of benefits. Because compensating permanent partial disabilities frequently involves contention, the matters in dispute will depend on the approach used to determine benefits. The continuation of such differences in approach suggests that the states have not found a single "best practice" for determining what such benefits should be.
Concurrent Receipt of Public Assistance and Old-Age, Survivors, and Disability Insurance, Early 1961
Concurrent Receipt of Public Assistance and Old-Age, Survivors, and Disability Insurance, Early 1962
The earliest eligibility age (EEA) interacts with many other Social Security program rules, including the benefit formula and insured status requirements. Proposals to increase the EEA could affect some or all of these other rules depending on how policymakers design the proposal. By using a hypothetical proposal that increases the EEA, this policy brief illustrates how these interactions work and discusses the options that policymakers would need to consider.
The authors investigate the extent of changes in workers' participation and contributions to defined contribution (DC) plans during the Great Recession of 2007–2009. Using longitudinal information from Social Security W-2 tax records matched to a nationally representative sample of respondents from the Survey of Income and Program Participation, they find that the recent economic downturn had a considerable impact on workers' participation and contributions to DC plans. A sizable segment of 2007 participants (39 percent) decreased their contributions to DC plans by more than 10 percent during the Great Recession. The findings also highlight the interrelationship between the dynamics in DC contributions and earnings changes.
This article examines the demographic challenge of an aging population on the U.S. Social Security system and the well-being of the elderly. It describes policy implications and some potential policy solutions to this challenge.
Among older women, widows are more likely to live in poverty than married women. Thus, increasing Social Security benefits to widows seems desirable. Shifting some Social Security benefits from the period when women live as part of a couple to the period when they are widows could reduce poverty. This article uses the 1991 Survey of Income and Program Participation exactly matched to the Social Security Administration's record of benefits to evaluate the effect on poverty rates of four cost-neutral proposals that transfer Social Security benefits from married couples to surviving widows. The policies would moderately decrease poverty rates among older women by reducing the rate for widows more than the slight increase in the rate for couples. The evaluated proposals include a proposal supported by the majority of the 1994-96 Advisory Council on Social Security that would calculate the survivor's benefit as 75 percent of the couple's benefit, reduce the spouse's benefit from 50 to 33 percent of the husband's benefit, and reduce benefits by 1.5 percent.
Costs of Medical Care of Old-Age and Survivors Insurance Beneficiaries in St. Louis and 12 Ohio Cities
Counting the Disabled: Using Survey Self-Reports to Estimate Medical Eligibility for Social Security's Disability Programs
This paper develops an approach for tracking medical eligibility for the Social Security Administration's (SSA's) disability programs on the basis of self-reports from an ongoing survey. Using a structural model of the disability determination process estimated on a sample of applicants, we make out-of-sample predictions of eligibility for nonbeneficiaries in the general population. This work is based on the 1990 panel of the Survey of Income and Program Participation. We use alternative methods of estimating the number of people who would be found eligible if they applied, considering the effects of sample selection adjustments, sample restrictions, and several methods of estimating eligibility/ineligibility from a set of continuous probabilities. The estimates cover a wide range, suggesting the importance of addressing methodological issues. In terms of classification rates for applicants, our preferred measure outperforms the conventional single variable model based on the "prevented" measure.
Under our preferred estimate, 4.4 million people—2.9 percent of the nonbeneficiary population aged 18–64—would meet SSA's medical criteria for disability. Of that group, about one-third have average earnings above the substantial gainful activity limit. Those we classify as medically eligible are similar to allowed applicants in terms of standard measures of activity limitations.
Covariance Estimates for Regression Parameters from Complex Sample Designs: Application of the Weighted Maximum Likelihood Estimator to Linear and Logistic Regression Analysis in Which Observations Might Not be Independent
Statistical methods of variance estimation are presented in this paper for the analysis of survey data involving complex sample designs. With certain complex sample design, estimation of the covariance matrices in linear and logistic regression is not straightforward. The design may be complex because of disproportionate sampling of strata, necessitating the use of weights, or because the observations are not independent, or possibly both. Examples are given from projects at the Social Security Administration, and computer programs written in SAS (Statistical Analysis System) are provided.
The Social Security Act of 1935 excluded from coverage about half the workers in the American economy. Among the excluded groups were agricultural and domestic workers. Some scholars have attributed this exclusion to racial bias against African Americans. In this article, the author examines the evidence of the origins of the coverage exclusions in 1935 and concludes that this particular provision had nothing to do with race.
Deeming Rules and the Increase in the Number of Children With Disabilities Receiving SSI: Evaluating the Effects of a Regulatory Change
This article examines a source of the growth in the SSI children's program: a relatively minor and little-noticed change in the financial eligibility rules. The way parental earnings were counted as income, or "deemed" to children (to use SSA language) was changed. The new, more generous financial eligibility rules added a small but significant number of recipients to the rolls after 1992 and also increased the benefit amounts for many of those already receiving SSI. Using SSA administrative data and a simulation technique, this article estimates how much the deeming policy change contributed to the expansion of the rolls and the cost of the program. We estimate that program costs of the deeming rule change were approximately $63 million annually in 1993 dollars. The change led to a 2-percent increase in the number of children on the rolls.
Defined Contribution Pension Participation and Contributions by Earnings Levels Using Administrative Data
This article examines the relationship between earnings levels and participation and contribution rates in defined contribution (DC) retirement plans. Specifically, the article estimates DC plan participation and contribution rates in 2006 both by the worker's current earnings and by the annual average of real earnings over the 10-year period 1997–2006. Using these two different measures of earnings allows us to assess whether employing a longer period of earnings, such as a decade, provides a better representation of pension outcomes than the short-term measure of current earnings.
This policy brief analyzes changes in the employer-sponsored pension system and the relationship of these changes to the Supplemental Security Income program's treatment of retirement plans. SSI does not treat assets in defined benefit and defined contribution retirement plans in the same manner. The primary difference is that a potential SSI recipient has access to the funds in a defined contribution plan, but a participant in the defined benefit plan has no access to the pension until attaining a specific age. The increasing prevalence of the defined contribution retirement plan and the decreasing prevalence of the defined benefit plan is one significant change—a trend that has gained momentum since the mid-1980s. The importance of these issues relates to the extent of pension plan holdings among SSI applicants and recipients, which is in turn directly related to their involvement in the labor force. The policy brief discusses three alternate approaches to SSI treatment of defined contribution retirement plans, one of which is to retain the current policy.
Despite extensive study of the work and retirement decisions of older individuals, the nature of employers' demand for older workers remains relatively unexplored. This paper investigates the plausibility, pervasiveness, and causes of limited employment opportunities for older workers by examining age discrimination, long-term employment relationships, and partial-retirement work options. The central theme is that much of the differential treatment of older workers that persists over time is likely to be part of a privately efficient, economic equilibrium. Provisional implications for Social Security and age-work policy choices are drawn.
Each month, over 3 million children receive benefits from Social Security, accounting for one of every seven Social Security beneficiaries. This article examines the demographic characteristics and economic status of these children using Social Security administrative records matched to the 1996 Survey of Income and Program Participation. Most child beneficiaries receive benefits based on the earnings of a deceased or disabled parent, and nearly two-thirds live in female-headed families. The families of child beneficiaries rely about equally on earnings and income from Social Security for economic support. On average, the family income of child beneficiaries was 25 percent lower than that of all children, but there was no statistically significant difference in the poverty rates of the two groups.
Sweden's new multipillar pension system includes a system of mandatory fully funded individual accounts. The Swedish system offers contributors more than 600 fund options from a variety of private-sector fund managers. However, in the most recent rounds of fund choice, more than 90 percent of new labor market entrants have not made an active choice of funds and thus have ended up in a government-sponsored default fund.
The Swedish system offers a number of lessons about implementing a mandatory individual account tier. Centralized administration keeps administrative costs down but requires considerable lead time. A very large number of fund options are likely to be offered unless strong entry barriers are in place. Engaging new labor market entrants in fund choice is likely to be difficult. A significant percentage of those making an active fund choice may choose funds that are very specialized and risky. Finally, special care must be devoted to designing a default fund and continual consumer communication.
This article examines factors affecting the growth in the Social Security Administration's disability programs. We synthesize recent empirical evidence on factors affecting trends in applications and awards for Disability Insurance and Supplemental Security Income (SSI) benefits and duration on the rolls. Econometric analyses of pooled time-series, cross-sectional data for States provide strong evidence of business cycle effects on applications and, to a lesser extent, on awards. Substantial effects of cutbacks in State general assistance programs are also found, especially for SSI. Estimated effects of the aging of the baby boomers, growth in the share of women who are disability insured, the AIDS epidemic, and changes in family structure are also presented. Indirect evidence suggests the importance of programmatic factors, especially for awards, and especially in the mental and musculoskeletal impairment categories. The decline in the average age of new awardees has substantially increased duration, particularly for SSI. As a result, caseload growth would be expected to continue even in the absence of future award growth.
Development and Evaluation of a Survey-Based Type of Benefit Classification for the Social Security Program
This article describes the statistical development of the geographic coding system used to identify worker location for the Continuous Work History Sample. The new system—which is planned for implementation for data year 1993—will provide more accurate geographic distributions of workers within a residence concept than the old system could provide within an employer location concept. The article also presents the results of a pilot study that tested the operational aspects of the new system. The results provide some preliminary estimates of the effect of the revised codes on the geographic distribution of workers.
This article examines the origins and legislative development of the U.S. Social Security program over its 75-year history. It traces the major amendments adopted over the decades and provides a summary assessment of the impact and importance of Social Security as a central pillar of the U.S. social welfare system.
This article describes the development of SSA's administrative records database for the Project NetWork return-to-work experiment targeting persons with disabilities. The article is part of a series of papers on the evaluation of the Project NetWork demonstration. In addition to 8,248 Project NetWork participants randomly assigned to receive case management services and a control group, the simulation identified 138,613 eligible nonparticipants in the demonstration areas. The output data files contain detailed monthly information on Supplemental Security Income (SSI) and Disability Insurance (DI) benefits, annual earnings, and a set of demographic and diagnostic variables. The data allow for the measurement of net outcomes and the analysis of factors affecting participation. The results suggest that it is feasible to simulate complex eligibility rules using administrative records, and create a clean and edited data file for a comprehensive and credible evaluation. The study shows that it is feasible to use administrative records data for selecting control or comparison groups in future demonstration evaluations.
Developments in the Equalization of Treatment of Men and Women Under Social Security in the Federal Republic of Germany
Growth in the number of applications and subsequent awards for Social Security disabled-worker benefits marked the period from 1986 through 1993. These increases resulted in the 37 percent rise in the number of disabled-worker beneficiaries, 6 out of 10 of whom had disabilities within three diagnostic groups: circulatory disorders; mental disorders (other than mental retardation); and musculoskeletal diseases. The percentage of disabled workers with a circulatory condition decreased from 21 to 14 percent, while the percentage with a mental disorder increased from 20 to 25 percent, and the percentage with musculoskeletal conditions increased from 18 to 21 percent. Musculoskeletal conditions (22 percent) were the leading diagnosis among disabled widows and widowers in 1993, while the disabled adult child population was dominated by the mental retardation diagnostic group (63 percent). Variations in diagnostic conditions of disabled workers by sex, age, and region were often substantial.
In recent years, the number of workers awarded disability insurance benefits has rapidly increased, while there has been no corresponding increase in the numbers leaving the rolls for recovery. Concern has been expressed that cash benefit payments may be leading to disincentives to beneficiaries to return to work after medical improvement
To examine this question, a comparative analysis was made of the demographic, disability, and benefit characteristics of a sample of disabled workers who left the benefit rolls for recovery in contrast to the characteristics of those who remained on the rolls after award of disability benefits in 1972. Characteristics related to greater recovery included younger age, higher education, disability due to traumatic injury, residence in western states.
It is widely known that about three-fourths of the working-age population is insured for Disability Insurance (DI), but the substantial role played by the Supplemental Security Income (SSI) program in providing disability benefit coverage is not well understood. Using data from the 1996 panel of the Survey of Income and Program Participation (SIPP) we find that over one-third (36 percent) of the working-age population is covered by SSI in the event of a severe disability. Three important implications follow: (1) SSI increases the overall coverage of the working-age population; (2) SSI enhances the bundle of cash benefits available to disabled individuals; and (3) interactions with other public programs—most notably the SSI path to Medicaid coverage—also enhance the safety net. Ignoring these implications could lead to inaccurate inferences in analytic studies.
The authors use longitudinal Social Security administrative data to produce statistics on the number of Disability Insurance (DI) and Supplemental Security Income (SSI)-only beneficiaries whose cash benefits were first suspended or terminated because of work and on the number of months thereafter that those beneficiaries remained in nonpayment status before their return to the program rolls, attainment of the full retirement age, or death—for each year from 2002 through 2006. We also explore differences by program title (DI versus SSI-only) and by participation in the Ticket to Work program. Finally, we examine outcome payments made on behalf of Ticket to Work participants in months of nonpayment status following suspension or termination because of work.
This paper presents the social and demographic characteristics of those disability claimants whose cases go to hearing. Particular attention is given to how these characteristics may be related to (1) the individual decision to contest a denial or accept it; (2) the general increase in disability claims and contested applications in recent years; and (3) the high proportion of reversals in hearings.
In December 1993, about 3.8 million persons under age 65 received Supplemental Security Income (SSI) payments because of a disability. More than half of these recipients had some form of mental disorder. In recent years, the number of disabled SSI recipients has climbed sharply. At the same time, there has been a change in the disability patterns among these recipients. The proportion of recipients with mental disorders, particularly those with psychiatric illness, is increasing steadily. Many of these recipients enter the SSI program in their youth and may stay in the program for many years. Similar increases and disability patterns in the Social Security Administration's Disability Insurance (DI) program imply program related causes, including recent changes to the disability requirements and outreach efforts. These changing disability patterns have implications for the size and shape of future SSI caseloads.
Using Health and Retirement Study data, the authors examine three groups of adults aged 51–56 in 1992 with different disability experiences over the following 8 years. Our analysis reveals three major findings. First, people who started and stayed nondisabled experienced stable financial security, with substantial improvement in household wealth despite substantial labor force withdrawal. Second, people who started as nondisabled but suffered a disability shock experienced a substantial increase in poverty rates and a sharp decline in median incomes. Average earnings loss was the greatest for that group, with public and private benefits replacing less than half of the loss, whereas the reduction in private health insurance coverage was more than alleviated by the increase in public health insurance coverage. Third, people who started and stayed disabled were behind at the baseline and have fallen further behind on most measures. An important exception is substantial improvement in health insurance coverage because of public safety nets.
The Temporary Assistance for Needy Families program serves as both a safety net and a way station for families with disabilities. According to most studies, at least a third of all households receiving these benefits include an adult or child with a disability. Surveys have found that persons with disabilities receiving these benefits were less likely to be working. Sanctioning rates of these families exceed those for families without disabilities, and continuing poverty is more common among cases that close. There is overlap between this welfare program and Supplemental Security Income; more than one out of every six of these families included a recipient of Supplemental Security Income in 2002.
This article presents the distributional effects of changing the Social Security indexing scheme, with an emphasis on the effects upon disabled-worker beneficiaries. Although a class of reform proposals that would slow the rate of growth of initial benefit levels over time—including price indexing and longevity indexing—initially appear to affect all beneficiaries proportionally, there can be different impacts on different groups of beneficiaries. The impacts between and within groups are mitigated by (1) the offsetting effect of changes in Supplemental Security Income benefits at the lower tail of the income distribution, and (2) the dampening effect of other family income at the upper tail of the income distribution. The authors present estimates of the size of these effects.
Disabled-Worker Beneficiaries and Disabled SSI Recipients: A Profile of Demographic and Program Characteristics
The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Incomes of Baby Boomers
A large share of traditional defined benefit pension plans have frozen within the past decade and evidence suggests that this trend will continue in the future. This article uses the Model of Income in the Near Term (MINT) microsimulation model to project the impact on boomers' retirement incomes of freezing traditional pension plans and replacing them with 401(k)-type plans. The projections suggest that the largest impact will be for the most recent boomers born between 1961 and 1965.
During 1981–2004, long-run earnings inequality among men increased by about the same magnitude as the well-documented increase in annual earnings inequality. Although the growth in annual earnings inequality was greater for women during these years, there was very little increase in their long-run earnings inequality. This article explores the conditions that produce the divergent trends in long-run earnings.
On average, persons receiving Social Security benefits tend to have lower current incomes than do persons paying Social Security taxes. This article documents OASDI's income distributional patterns by dividing the 1992 Current Population Survey population into 10 income deciles and tabulating benefits received and taxes paid by each decile. The benefits and taxes, when compared with non-Social Security income, are progressive: as income rises from decile to decile, the ratio of benefits to income falls, and, except at the highest deciles, the ratio of taxes to income rises.
A large component of the current income distributional pattern is associated with age: the young on average receive more income and pay more taxes; the old on average receive more benefits. However, when benefits and taxes are tabulated for income deciles within specific age groups, a general progressivity is still observable, although it is weaker than that for the population as a whole.
This note uses data from the Modeling Income in the Near Term (MINT) project to estimate the distribution of zero-earnings years by gender, birth cohort, and level of lifetime earnings from 1951 to 1996. The analysis is focused mainly on zero-earnings years that fall within a worker's highest 35 years of earnings, because only these years are used in the calculation of benefits.
The 2001 report of the Social Security trustees projected that the combined trust funds for the Old-Age and Survivors Insurance and Disability Insurance programs will be exhausted in 2038. This analysis explains the effects of insolvency on future retirement benefits and poverty rates of beneficiaries if no action is taken to strengthen Social Security.
Under the Social Security program, benefits are paid to retired workers, survivors, and disabled persons out of two trust funds—the Old-Age and Survivors Insurance and the Disability Insurance (OASDI) Trust Funds. In their 2005 report, the Social Security Trustees projected that the combined OASDI trust funds would be exhausted in 2041. Because the trust funds are used to pay benefits, retirement benefits would have to be reduced somewhat in 2041 and more drastically in 2042.
If no action were taken to strengthen Social Security, the benefit reductions necessitated by the exhaustion of the trust funds would double the poverty rate of Social Security beneficiaries aged 64–78 in 2042, from 1.5 percent to 3.3 percent. However, this increased poverty rate would still be lower than the current poverty rate for beneficiaries aged 62–76, which is 4.6 percent. In addition, the trust funds' exhaustion could lead to lower returns on payroll taxes using traditional "money's-worth" measures.
This policy brief compares two options set forth by the Social Security Advisory Board to increase the full retirement age (FRA), the age at which claimants may receive unreduced Social Security old-age benefits. One option would raise the FRA from the current target of 67 years to 68 years; the other would raise the FRA to 70 years. The brief examines the effects of both options on the level of benefits of Social Security beneficiaries aged 62 or older in 2070 using Modeling Income in the Near Term (MINT) projections, and on Trust Fund solvency using estimates from the Social Security Administration's Office of the Chief Actuary. The brief finds that both options would reduce benefits, improve solvency, and slightly increase the poverty rate. Within each option, effects on benefits are relatively uniform across beneficiary characteristics, although some surviving spouse and disabled beneficiaries would be shielded from benefit reductions.
This study evaluates the effects of changing the averaging period used to calculate Social Security benefits from 35 years to 38 or 40 years and the introduction of a minimum benefit provision for future retirees born during the early part of the baby boom generation. Proposals to change the averaging period have been recommended by a majority of the 1994–96 Advisory Council on Social Security. Based on the Survey of Income and Program Participation (SIPP) matched to Social Security Administration earnings records, the study projects retirement benefits for different subgroups of the population under existing and proposed benefit rules. The magnitudes of the retirees' benefit changes vary by demographic group. The minimum benefit provision substantially mitigates the effects of the change to a 40-year averaging period for some groups of women.
The computation period is the number of highest earning years, currently 35, that are used to compute the career average earnings on which Social Security benefits are based. The brief uses MINT model projections to compare the distributional effects of two policy options discussed by the Social Security Advisory Board.
This policy brief compares five options (four progressive price indexing and one full price indexing option) set forth by the Social Security Advisory Board to index initial benefits to price growth. It examines the distribution of benefits of Social Security beneficiaries aged 62 or older in 2030, 2050, and 2070 using Modeling Income in the Near Term (MINT) model projections. The brief finds that the full price indexing option Shield 0% would more than achieve long-term solvency by reducing benefits by about 35 percent in 2070 and would increase the aged poverty rate compared with scheduled levels. The four progressive price indexing options (Shields 30%, 40%, 50%, 60%) would produce smaller benefit reductions by exempting varying proportions of lower earners from price indexing. Those options would not increase poverty above scheduled levels, but would reduce benefits for some low earners because their auxiliary benefits come from the reduced benefits of a higher-earning spouse. The progressive price indexing options would make Social Security more progressive compared with scheduled and payable benefits, both when looking at household benefit reductions by household income in a given year and when examining the distribution of lifetime taxes and benefits.
This policy brief analyzes the lifetime tax effects of two options for addressing the Social Security system's long-range solvency by raising the Social Security payroll tax rate. The first, an immediate increase, would have raised the payroll tax rate from its current 12.4 percent to 14.4 percent in 2006; the second, a phased increase, would raise the payroll tax rate to 14.5 percent in 2020, and then to 16.6 percent in 2050. The brief also analyzes a comparative scenario in which the current tax rate is maintained through 2041 and then raised each year as needed to pay scheduled benefits. The lifetime taxes of people born 1936–2015 are analyzed using Modeling Income in the Near Term (MINT) projections. Results show that the longer a tax rate increase is delayed, the fewer workers are affected, but also the higher the increase in lifetime taxes for later generations. The results also show that both options reduce the cross-cohort variability in the ratio of benefits received to taxes paid.
As of 2009, Social Security's Old-Age, Survivors, and Disability Insurance program limits the amount of annual earnings subject to taxation at $106,800, and this value generally increases annually based on changes in the national average wage index. This brief uses Modeling Income in the Near Term (MINT) projections to compare the distributional effects of four options for raising the maximum taxable earnings amount beyond its scheduled levels. Two of the options would raise this value so that it covers 90 percent of all covered earnings and two would remove the maximum completely. Within each set of options, the proposals are differentiated by whether the new taxable amounts are used in computing benefits. Most workers would not be affected by these proposals, but some higher earners would experience a substantial increase in taxes. Correspondingly, benefit increases are largely isolated to higher earners, although the return in benefits for taxes paid would also decline. Because the proposals are targeted toward high earners, Social Security's progressivity would increase.
Each year, Social Security benefits increase automatically with the cost-of-living adjustment (COLA), which is based on the rise in the consumer price index for urban wage earners and clerical workers (CPI-W). The analysis uses Modeling Income in the Near Term (MINT) projections to compare the distributional effects of three policy options discussed by the Social Security Advisory Board to improve system solvency.
A person's Social Security benefit, or primary insurance amount (PIA), is 90 percent of the lowest portion of lifetime earnings, plus 32 percent of the middle portion of lifetime earnings, plus 15 percent of the highest portion of lifetime earnings. This policy brief analyzes the distributional effects of three options (the three-point, five-point and upper) discussed by the Social Security Advisory Board to reduce the PIA. The first option would reduce the PIA by 3 percentage points; the second would reduce it by 5 percentage points; and the third would reduce the 32 and 15 percentages of the PIA to 21 and 10 percent, respectively. The third option would exempt about one quarter of the lowest earning beneficiaries, while reducing benefits by a median average of 19 percent in 2070. None would eliminate Social Security's long-term fiscal imbalance, although the third option would eliminate more (76 percent) of the deficit than the three-point (18 percent) and five-point (31 percent) options.
This article describes the economic resources and economic well-being of future divorced women at retirement using data from the Social Security Administration's project on Modeling Income in the Near Term (MINT). The MINT model projects that in the near term, there will be more divorced women of retirement age. Because fewer of those women are projected to meet the 10-year marriage requirement, the proportion of economically vulnerable aged women is expected to increase when the baby boom retires.
In a 2001 working paper, Links Between Early Retirement and Mortality (ORES Working Paper No. 93), the author used cross-sectional Current Population Survey (CPS) matched to longitudinal Social Security administration data and found that men who retire early die sooner than men who retire at age 65 or older. Estimates of relative mortality risk control for current age, year of birth, education, marital status in 1973, and race, and the sample is restricted to men who have lived to at least age 65.
This paper uses the 1982 New Beneficiary Survey and a 1 percent extract of the Social Security Administration's year 2000 Master Beneficiary Records to test whether the mortality differentials reported in the author's earlier work can be replicated in other independent data sets.
Education about retirement affects how employees use distributions from their defined contribution pension plans. Retirement education substantially increases the probability that participants age 40 and under will save a distribution but decreases the probability that college graduates and women will save one. These important differentials are concealed by estimates of the effect of retirement education on participants generally.
Policies that would reduce or eliminate Social Security benefits for early retirees could have adverse consequences for older workers in poor health. This article documents the health and financial circumstances of beneficiaries aged 62–64. It examines the extent to which poor health limits work among early retirees and assesses the extent to which curtailment of early retirement benefits might lead to increases in the Disability Insurance program rolls.
Some proposals to change the Social Security program to ensure long-run solvency would reduce or eliminate benefits to some early retirees. To what extent might those benefit reductions cause hardship for individuals with precarious financial circumstances and whose health appears to limit their ability to offset reductions in Social Security income through increased earnings? Our research is intended to identify the size and characteristics of the population that might be at risk as a consequence of such changes.
The central finding is that over 20 percent of early Social Security retirees have health problems that substantially impair their ability to work. In fact, among those aged 62–64 who are severely impaired, there are as many Old-Age and Survivors Insurance beneficiaries as there are beneficiaries under SSA's two disability programs. The retirement program functions as a substantial, albeit unofficial, disability program for this age group. Moreover, the majority of the most severely impaired early retirees would not qualify for Disability Insurance benefits.
Earnings and Disability Program Participation of Youth Transition Demonstration Participants after 24 Months
This article presents earnings and Social Security Administration (SSA) disability program payment outcomes for youths participating in SSA's Youth Transition Demonstration project. Participants were randomly assigned to treatment or control groups at each of six project sites. The author provides overviews of the project sites and compares treatment- and control-group youths' earnings 1 year and 2 years after random assignment, and disability program payment receipt 24 months after random assignment.
This article looks at the history of earnings in covered employment for the 300,000 disabled SSI beneficiaries who were working in December 1997. It provides background information on beneficiaries essential to SSA's efforts to help them return to work.
Social Security solvency proposals may affect blacks as a group differently than those of other races because of differences in earnings, mortality, and rates of disability. To provide some background for understanding this issue, this note examines the earnings of workers by age and race, comparing those who recently died or became entitled to Social Security disability benefits with those still alive. It does not analyze any specific proposal for changing benefits.
Earnings Sharing in Social Security: Projected Impacts of Alternative Proposals Using the MINT Model
Earnings sharing is an alternate method of calculating Social Security retirement benefits whereby earnings are assumed to be shared by married couples. This article presents a microsimulation analysis to estimate the impact of three earnings sharing proposals on the aged population of married, divorced, and widowed men and women in 2030. The impact of earnings sharing differs by marital status and sex, as measured by the percentage change in benefits and by the percentage of beneficiaries with increased and reduced benefits.
Despite increased labor force participation rates among women and reforms under the Employee Retirement Income Security Act, widowhood remains an important risk factor for transition into poverty, although somewhat less so than 20 years ago. Women widowed at younger ages are at greatest risk for economic hardship after widowhood, and their situation declines with the duration of widowhood. We also find that women in households that are least prepared financially for widowhood are at greatest risk of a husband's death, because of the strong relationship between mortality and wealth.
This bibliography is a by-product of preparing a review of the economic literature on the effect of Social Security's retirement program on the labor supply of older workers. In the course of organizing a set of scribbled notes, the outline of the current document began to take shape. Several colleagues found earlier, incomplete drafts of these notes to be of some value in their own work, and encouraged me to offer them to a wider audience.
These notes are intended to provide a helpful overview of the models, data sources, and statistical procedures used by economists in recent years to investigate the work-retirement decision.
The Economic Well-Being of Social Security Beneficiaries, with an Emphasis on Divorced Beneficiaries
There are numerous types of benefits paid under the Social Security programs of the United States, with each type of benefit having its own set of eligibility rules and benefit formula. It is likely that there is an association between the type of benefit a person receives and the economic circumstances of the beneficiary. This paper explores that association using records from the Current Population Survey exactly matched to administrative records from the Social Security Administration. Divorced beneficiaries are a particular focus of this paper.
Type of benefit is found to be a strong predictor of economic well-being. Two large groups of beneficiaries, retired-worker and aged married-spouse beneficiaries, are fairly well off. Other types of beneficiaries tend to resemble the overall U.S. population or are decidedly worse off. Divorced-spouse beneficiaries have an unusually high incidence of poverty and of serious health problems. A proposal to increase benefits for these beneficiaries is evaluated. Results indicate that much of the additional government expenditures would be received by those with low income.
The Economic Well-Being of Social Security Beneficiaries, with an Emphasis on Divorced Beneficiaries
There are numerous types of benefits paid under the Social Security programs of the United States, with each type of benefit having its own set of eligibility rules and benefit formula. It is likely that there is an association between the type of benefit a person receives and the economic circumstances of the beneficiary. This article explores that association using records from the Current Population Survey exactly matched to administrative records from the Social Security Administration. Divorced beneficiaries are a particular focus of this article.
Type of benefit is found to be a strong predictor of economic well-being. Two large groups of beneficiaries, retired-worker and aged married spouse beneficiaries, are fairly well-off. Other types of beneficiaries tend to resemble the overall U.S. population or are decidedly worse off. Divorced spouse beneficiaries have an unusually high incidence of poverty and an unusually high incidence of serious health problems. A proposal to increase benefits for these beneficiaries is evaluated. Results of the analyses indicate that much of the additional Government expenditures would be received by those with low income.
This paper examines the family income and the household wealth and income of old old persons. Subgroups of the old old are compared, and the old old are compared with the young old. When the old old group is separated into three subgroups—widows living alone, other females, and males—the economic status of widows living alone is substantially below that of the other two subgroups. This difference is found when income, wealth, and combined income-wealth measures are used. When the old old group is compared with the young old group, the economic status of the old old is substantially lower for all measures examined. When the three subgroups within both the old old and young old groups are compared, the economic status of each subgroup is lower for the old old for most measures. Income data from the March 1991 Current Population Survey and wealth and income data from the 1984 Survey of Income and Program Participation are used.
This paper provides a nontechnical explanation of the basic ideas that underpin economists' thinking about work and retirement decisions and discusses and elaborates on the basic economic model of retirement. The paper begins with a simple economic model of an individual's work decision, to explain the construction and logic of this model, and to show how the model can be used to make basic predictions about factors that might plausibly affect the timing of retirement. From this starting point—which essentially describes the economic retirement models before the late 1970s—the paper then explains how the model has been extended during the past 2 decades. The increasing sophistication and complexity of the models reflect scientific progress in which new retirement research incorporates the findings of previous efforts, the desire to incorporate more realism into the models, and the availability of improved data. The progress in economic modeling is emphasized as the contributions of various influential studies are reviewed.
Concern about the economic consequences of the aging of the United States population has prompted considerable research activity during the past two decades. Economists have carefully examined retirement patterns and trends, and sought to identify and measure the determinants of the timing of retirement by older workers. Much of the published retirement research is fairly technical by nature and is somewhat inaccessible to nonspecialist audiences. This article provides a nontechnical overview of this research. In contrast to other reviews of the retirement literature, this exposition emphasizes the basic ideas and reasoning that economists use in their research. In the course of recounting how economists' views about retirement have evolved in recent years, the article highlights landmark pieces of research, points out the specific advances made by the various researchers, and assesses what has been learned along the way.
Effect of Increased Federal Participation in Payments for Old-Age Assistance, 1940-41, and Aid to Dependent Children, 1940-42
This study attempts to determine how persons aged 65–69 would respond to eliminating the earnings test by looking at the changes in labor market behavior of 70- and 71-year-olds whose earnings test coverage was eliminated beginning in 1983. In particular, it tries to determine whether 70- and 71-year-olds increased their labor force participation and earnings once the earnings test was removed. This issue is important because proposals to eliminate the earnings test for persons aged 65–69 generally assume that a portion of the additional benefit expenses would be recovered by income and payroll taxes generated by increased work effort among this age group.
The Effect of the SSI Program on Labor Supply: Improved Evidence from Social Security Administrative Files
We use public-use microdata linked to Social Security Administration records to reexamine the impact of the Supplemental Security Income program on work disincentives among older individuals nearing the age of eligibility for Supplemental Security Income for the aged and likely to use the program. The administrative records provide significant advantages relative to past research and yield strong evidence that the Supplemental Security Income program induces some individuals nearing the age of eligibility to reduce their labor supply.
The Effect of Vocational Rehabilitation and Work Incentives on Helping the Disabled-Worker Beneficiary Back to Work
This article is the second in a series of articles that use data from the New Beneficiary Followup survey to analyze the work effects of the Social Security Administration's Disability Insurance beneficiaries. Survival analysis techniques are used to determine the effect of vocational rehabilitation efforts and work incentive program provisions on actual work outcomes. The findings indicate that the demographic variables of age, gender, race, education, and marital status affect the tendency to return to work in the expected way. The results suggest a possible disincentive effect may be built into certain work incentive provisions of the program. The encouraging news is that the vocational rehabilitation efforts seem to have a positive effect on the tendency to return to work. Physical therapy, vocational training, general education, and job placement efforts all seem to increase the tendency to go back to work.
The Effect of Welfare Reform on SSA's Disability Programs: Design of Policy Evaluation and Early Evidence
Recent legislation has affected the populations served by the Social Security Administration's (SSA's) disability programs. The Contract with America Advancement Act of 1996 mandated that persons whose disability determination was based on drug addiction or alcoholism be removed from the Supplemental Security Income and Social Security Disability Insurance rolls. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (later amended by the Balanced Budget Act of 1997) tightened the SSI eligibility criteria for children and converted the Aid to Families with Dependent Children program into a block grant, Temporary Assistance for Needy Families. This article describes the design of three related studies evaluating the direct and indirect effects of these policy changes on SSA's disability populations. It describes the methodological challenges of the studies and the strategies used to overcome them. It also presents early evidence from the three studies and discusses future directions.
A major policy issue for the Social Security program is the treatment of earnings of persons who have attained retirement age. This article discusses the retirement test and recomputation of benefit provisions, and provides statistical data for 1995.
In 1995, about 806,000 persons aged 65–70 had significant earnings resulting in the withholding of benefits by the retirement test. About 1,659,000 persons aged 65 or older realized an increase in their benefit amount because of their earnings.
This article provides an overview of the literature on best practices for retirement savings plan design and financial education in the workplace. Without a successful plan design, financial education will not be effective and even a well-structured plan can fail to achieve retirement savings goals without financial education. The main components of a retirement savings program that employers must consider include options for enrollment, investment choices, employer matching of contributions, and distributions over the working career and at retirement. In addition, employers control the core aspects of financial education, such as the topics covered, the delivery methods used, the frequency with which it is offered, and its general availability.
The Effects of Changing Social Security Administration's Early Entitlement Age and the Normal Retirement Age
The rising cost of employer contributions for employee health insurance reduces the percentage of compensation subject to Social Security payroll taxes. This article uses the Medical Expenditure Panel Survey to analyze trends in the cost of employer health insurance contributions relative to money wages and total compensation. The analysis shows how increasing employer health insurance premium costs from 1996 to 2008 reduced the percentage of compensation subject to payroll taxes, and it predicts the effects of health insurance reform on taxable compensation.
The Effects of the Social Security Earnings Test on the Labor-Market Activity of Older Americans: A Review of the Evidence
Researchers David Autor and Mark Duggan have hypothesized that the Social Security benefit formula using the average wage index, coupled with a widening distribution of income, has created an implicit rise in replacement rates for low-earner disability beneficiaries. This research attempts to confirm and quantify the replacement rate creep identified by Autor and Duggan using actual earnings histories of disability-insured workers over the period 1979–2004. The research finds that disability replacement rates are rising for many insured workers, although the effect may be somewhat smaller than that suggested by Autor and Duggan.
Supplemental Security Income SSI is a federally administered, means-tested program that provides monthly payments to blind, disabled, or aged persons. This policy brief summarizes efforts since 2000 to simplify the SSI program through policy changes affecting the reporting of income and resources. The Social Security Protection Act (SSPA) of 2004 has provisions that simplify the treatment of infrequent and irregular income, interest and dividend income, income earned by a student, one-time income in an initial month of eligibility, military pay, and exclusion of certain income from countable resources. Final regulations published in 2005 contain simplifications in the definition of income to exclude clothing, household goods and personal effects, and automobiles from countable resources. This brief explains those changes and describes other options that have been considered.
Provided here are the absolute and relative poverty status of 2002 elderly Supplemental Security Income (SSI) recipients. Official poverty estimates are generated from the Current Population Survey's Annual Social and Economic Supplement (CPS/ASEC). The poverty study presented here differs from previous studies in that it is based on CPS/ASEC income and weight records conditionally adjusted by matching Social Security administrative data. This effort improves the coverage of SSI receipt and the accuracy of SSI estimates. The adjusted CPS/administrative matched data reveal lower 2002 poverty rates among elderly persons (with and without SSI payments) than those generated from the unadjusted CPS/ASEC data.
This article is an extension of work reported in an earlier article entitled, "Elderly Poverty and Supplemental Security Income" (Social Security Bulletin 69(1): 45–73). Like the original work, the present study looks at the consequences of obtaining estimates of the prevalence of poverty among persons aged 65 or older by using administrative data to adjust incomes reported in the Current Population Survey. The original article looked at incomes in 2002; the present one covers measures of absolute and relative poverty status of the elderly during the 2003–2005 period. Again, we find that inclusion of administrative data presents challenges, but under the methodology we adopt, such adjustments lower estimated official poverty overall and increase estimated poverty rates for elderly SSI recipients by correcting for the misreporting of SSI, OASDI, and earnings receipt by CPS respondents.
Eligibility for the Medicare Buy-in Programs, Based on a Survey of Income and Program Participation Simulation
Fewer people appear eligible for Medicare buy-in programs than most earlier research indicated, implying that participation rates may be higher than previously believed. The authors estimate a 63 percent rate of participation among those eligible for the combined Qualified Medicare Beneficiary and Specified Low-Income Medicare Beneficiary programs in 1999. The estimates are based on Survey of Income and Program Participation data matched to the Social Security Administration's administrative records. The matched data provide information of better quality than the data used in previous studies.
An Empirical Study of the Effects of Social Security Reforms on Benefit Claiming Behavior and Receipt Using Public-Use Administrative Microdata
In the past few years, the Social Security Old-Age and Survivors Insurance benefit system in the United States has undergone some of the most significant changes since its inception. Using the public-use microdata extract from the Master Beneficiary Record, we are able to uncover a number of interesting trends in benefit claiming behavior and level of benefit receipt, which can help us understand how the changes in the system are shaping the retirement benefit claiming behavior of older Americans.
Using linked administrative data from program and earnings records, we summarize the 2007 employment rates of working-age (18–64) Social Security disability program beneficiaries at the national and state levels, as well as changes in employment since 1996. Substantial variation exists within the population. Disability Insurance beneficiaries and those younger than age 40 were much more likely to work relative to other Social Security beneficiaries. There are also strong regional differences in the employment rates among disability beneficiaries of working age, and these differences are persistent over time.
This article introduces and highlights the key findings of the other articles presented in this special issue, which focuses on the employment of beneficiaries in the Social Security Disability Insurance and Supplemental Security Income programs.
The Employment Opportunities for Disabled Americans Act: Legislative History and Summary of Provisions
The Erosion of Retiree Health Benefits and Retirement Behavior: Implications for the Disability Insurance Program
The number of companies offering health benefits to early retirees is declining, although reductions in the percentage of early retirees covered by health insurance have been only slight to date. In general, workers who will be covered by health insurance are more likely than other workers to retire before the age of 65, when they become eligible for Medicare. What effect that will have on claims under the Disability Insurance program is not yet clear.
Estimates of Unreported Asset Income in the Survey of Consumer Finances and the Relative Importance of Social Security Benefits to the Elderly
Through the 1990s and the early 2000s, the Income of the Population 55 or Older has reported a decline in the proportion of the elderly receiving asset income and the corresponding rise in the proportion receiving all of their income from Social Security. This analysis uses the Survey of Consumer Finances from 1992 to 2001 to examine financial asset holdings of the elderly and to determine if those who do not report asset income in fact might hold assets that are likely to generate income. Imputing asset income from likely income-producing holdings, the article examines the impact of probable missing asset income information upon measures of elderly income.
Estimation of Disability Status as a Single Latent Variable in a Model with Multiple Indicators and Multiple Causes
In this paper, we are concerned with the underlying structure of self-definitions of disability. Our purpose is to identify the contribution of exertional and nonexertional impairment and the contributions of such nonmedical factors as age, sex, and education to the individuals' assessment of their own situations. On a statistical level, we seek to accomplish a substantial reduction of a large number of data items into a form that can be used conveniently in subsequent behavioral analyses.
How did workers aged 65–69 respond to the removal of the retirement earnings test in 2000? Using Social Security administrative data matched with data from the Survey of Income and Program Participation, the author finds that the higher earners in this group increased their earnings, while the lower earners did not. The author reports an acceleration of benefit applications by workers aged 65–69 but no clear evidence of increased employment in this age group.
Evidence on the Effects of Payroll Tax Changes on Wage Growth and Price Inflation: A Review and Reconciliation
The Social Security payroll tax rate is scheduled to increase by almost 1 percent for both employees and employers between now and 1990. One of the major elements of the recently adopted Social Security package was an acceleration of the timing of this increase. A number of economists have recommended that as an anti-inflationary policy scheduled increases be avoided or even that the current rates be rolled back.
This article examines the development of Japanese voluntary employer-sponsored retirement plans with an emphasis on recent trends. Before 2001, companies in Japan offered retirement benefits as lump-sum severance payments and/or benefits from one of two types of defined benefit (DB) pension plans. One DB plan type was based on an earlier occupational pension model used in the United States. The other DB plan type allowed companies to opt out of the earnings-related portion of social security. Landmark laws passed in 2001 introduced a new generation of occupational retirement plans to employers and employees, creating three new DB plan designs and two new defined contribution types of plans. Since that time, the mix of employer-sponsored retirement plans offered in Japan has changed significantly, and overall employee coverage has declined. On balance, employer-sponsored retirement plans have remained largely DB in design.
Since its inception, Social Security has featured a taxable maximum (or "tax max"). In 1937, payroll taxes applied to the first $3,000 in earnings. In 2011, payroll taxes apply to the first $106,800 in earnings. This policy brief summarizes the changes that have occurred to the tax max and to earnings patterns over this period. From 1937 to 1975, Congress increased the tax max on an ad-hoc basis. Increases were justified by the desire to improve system financing and maintain meaningful benefits for middle and higher earners. Since 1975, the tax max has generally increased at the same rate as average wages each year. Some policymakers propose increasing the tax max beyond wage-indexed levels to help restore financial balance and to reflect growing earnings inequality, as workers earning more than the tax max have experienced higher earnings growth rates than other workers in recent decades.
Examining Social Security Benefits as a Retirement Resource for Near-Retirees, by Race and Ethnicity, Nativity, and Disability Status
This article examines the distribution of Social Security benefits among recent cohorts of near-retirees, by (1) race and ethnicity, (2) nativity, and (3) disability status. Actual earnings history data help produce more accurate measures of benefits. The authors find that substantial differences in earnings levels and/or mortality levels among these subgroups interact with Social Security program provisions to produce sizable differences in values of benefit measures, such as Social Security wealth and earnings replacement rates.
An Example of the Use of Statistical Matching in the Estimation and Analysis of the Size Distribution of Income
This paper discusses the use of statistical matching in the estimation and analysis of the size distribution of family unit personal income. Statistical matching is a relatively new technique that has been used to combine, at the single observation level, data from two different samples, each of which contains some data items that are absent from the other file. In a statistical match, the information brought together from the different files ordinarily is not for the same person but for similar persons; the match is made on the basis of similar characteristics. In contrast, in an "exact" match, information for the same person from two or more files is brought together using personal identifying information.
Executive Summary from—Technical Panel on Assumptions and Methods (2003); Report to the Social Security Advisory Board
The full report is available at http://www.ssab.gov/documents/2003TechnicalPanelRept_000.pdf.
Some proponents of the privatization of the Social Security program in the United States have suggested that, because privately available rates of return exceed the internal rate of return implicit in that program, it may be possible to find Pareto-superior privatization schemes. In a similar vein, Townley (1981) argues that, so long as the government can incur debt, a Pareto-superior scheme can always be found to convert a dynamically inefficient pay-as-you-go Social Security program to a fully funded basis. This note uses Townley's own model to demonstrate analytically that Pareto-superior schemes to reverse a dynamically inefficient pay-as-you-go social security program do not exist, either through privatization or through conversion of the program to a fully funded basis.
Expanding Access to Health Care for Social Security Disability Insurance Beneficiaries: Early Findings from the Accelerated Benefits Demonstration
The Accelerated Benefits (AB) demonstration project provides health benefits to Social Security Disability Insurance beneficiaries who have no health insurance during the 24-month period most beneficiaries are required to wait before Medicare benefits begin. This article describes the project and presents baseline survey results on health insurance coverage among newly entitled beneficiaries and the characteristics of those without coverage. A 6-month follow-up survey provides information on the effects of the AB health benefits package on health care utilization and on reducing unmet medical needs. The article also reports the costs of providing the health benefits package during the 24-month Medicare waiting period.
This article includes a short overview of existing research and reprints some of the charts available in the Expenditures of the Aged Chartbook. The goal of the chartbook is to improve the availability of statistics on expenditures of the aged. Data are based on the 2002 Consumer Expenditure Survey Public-Use File. Measures of standards of living, such as expenditures, help inform policymakers and researchers who are concerned about the adequacy of economic resources of the aged.
Factors Affecting Initial Disability Allowance Rates for the Disability Insurance and Supplemental Security Income Programs: The Role of the Demographic and Diagnostic Composition of Applicants and Local Labor Market Conditions
Various factors outside the control of decision makers may affect the rate at which disability applications are allowed or denied during the initial step of eligibility determination in the Social Security Disability Insurance (DI) and Supplemental Security Income (SSI) programs. This article, using individual-level data on applications, focuses on the role of three important factors—the demographic characteristics of applicants, the diagnostic mix of applicants, and the local unemployment rate—in affecting the probability of an initial allowance and state allowance rates. A random sample of initial determination administrative records for the 1993–2008 period is used for the analysis in a fixed-effects multiple regression framework. The empirical results show that the demographic and diagnostic characteristics of applicants and the local unemployment rate substantially affect the initial allowance rate. An increase in the local unemployment rate tends to be associated with a decrease in the initial allowance rate. This negative relationship holds for adult applicants in both the DI and SSI programs and for SSI childhood applicants.
Congress is currently placing considerable emphasis on returning disabled-worker beneficiaries to work. However, going back to work is only the first step in the complex process of program termination due to work and trust fund savings. Not only must the beneficiary get a job, but also the work effort must be sustained at what is considered a substantial gainful activity (SGA) level by the disability program (so that an SGA termination will result) and a reasonable living condition must be achieved by the beneficiary(so that the person is motivated to continue working and lose benefits). This articles focuses on those factors that affect the ability of the beneficiary to sustain such a work effort. Combined with previous findings about returning to work, we begin to see the overall effect of the factors on work efforts.
Beneficiaries who have physical therapy rehabilitation have a higher tendency to start working and a lower tendency to stop. Those with vocational training or general education have a higher tendency to start working, but these factors do not help to sustain the effort. Beneficiaries who were helped with job placement have a higher tendency to start work, but they also have a higher tendency to stop. If beneficiaries knew about the trial-work period, but not about either the extended period of eligibility or Medicare continuation, then they had a higher tendency to start work and a higher tendency to stop. However, if they knew about all three work-incentive provisions, then the tendency to work was not affected.
This exploratory paper examines the role of age in the distribution of family income in several countries. Unlike most papers that compare the distribution of income across countries, the primary concern in this paper is not with comparisons of the overall degree of inequality. Instead we are more interested in two aspects of the cross-section relationship between age and income. First, we are interested in the relative economic well-being of income recipient units in different age (of head) groups in several developed countries. In the U.S. in recent years, in connection with modifications to the social security system, there has been considerable discussion of the "fair" level of income of the aged population. That discussion has led us to a particular interest in the relative economic well-being of the aged population in other developed countries. Where the data allow, the aged (age 65 and over) group is split into 65–69 and 70 and over age groups as at least partial recognition that economic well-being can differ markedly among subgroups of the aged population. (Other important characteristics such as labor force participation, sex, and the receipt of government retirement income could not be examined.) This paper attempts an initial look at the very complex subject of the relative economic well-being of different age groups in several countries.
The role of time as an input into the utility maximization process has long been recognized in the labor/leisure decision. Expanded research has dealt with this input in a family context. Assuming a joint utility maximization model, the resulting labor supply functions can be determined for both spouses.
The model presented here is an extension of previous models by its incorporation of the effects of disabling conditions of the husband on the labor supply decisions of both spouses.
Because hours worked takes on a lower limit of zero, the standard simultaneous equation techniques would yield estimates lacking the ideal properties. Instead, the model is estimated using a simplification of a simultaneous TOBIT technique, which yields consistent estimates.
The economic status of the elderly and the economic status of children are analyzed using a comprehensive definition of income that takes selected types of noncash income and taxes into account. Estimates are presented for detailed age groups over the entire age range and for socioeconomic classifications within the elderly subgroup and within the subgroup of children. The paper finds that children and the elderly are less well off than the middle age groups. This result is obtained using median incomes and the percentage of the group that has low income, as defined here. When results obtained with the measures presented in this paper are compared with results obtained with more commonly used measures, there are important differences for both the elderly and for children. For both groups, the composition of the low-income population differs in important ways from the composition of the official poverty population.
This article examines fast-track procedures in long-term public disability programs in the United States and several other countries. Such procedures share a common goal of accelerating applicants—generally for those with severe disabilities, blindness, or facing terminal illness—through the disability determination process.
This paper reports on estimates of federal income tax and Social Security tax liabilities of family units in 1972 and summarizes the methods used to make the estimates. Distributions of income both before and after subtracting those liabilities are shown. Several microdata files were combined using both "exact" and "statistical" matching of individual observations in the process of making these estimates.
Social Security's Office of the Chief Actuary provides an overview on the current and projected financial condition of the Disability Insurance program.
Financing Basis of Old-Age, Survivors, and Disability Insurance and Health Insurance Under the 1967 Amendments
Financing Old-Age, Survivors, and Disability Insurance: Report of the Advisory Council of Social Security Financing
Presented is an examination of the financing history of the U.S. Social Security system from the passage of the original law in 1935 up through the enactment of the 1950 Amendments to the Social Security Act. In particular, it focuses on the 1939 Social Security Amendments and the subsequent tax rate freezes enacted between 1939 and 1949. It examines the origins of these taxing policies and assesses the impact of the rate freezes on the long-range actuarial balance of the Social Security program during this period.
The Food Stamp Program (FSP) and Supplemental Security Income (SSI) are important parts of national public assistance policy, and there is considerable overlap in the populations that the programs serve. This article investigates FSP participation by households that include SSI recipients and assesses the importance of various provisions of the Food Stamp Program that favor SSI recipients.
Disability has high societal and personal costs. Various disparate federal and state programs attempt to address the economic and social needs of people with disabilities. Presumably workplace injuries and accidents are an important source of disability. Yet separate public policies and research literatures have evolved for these two social problems—disability and workplace injuries—despite their relatedness. This article seeks to document the overlap between these two phenomena in estimating the proportion of the disabled population whose disability was caused by workplace injury, accident, or illness using the Health and Retirement Study of 1992. The results point toward the need for initiatives to reduce disability that focus on work-related causes, which are a common pathway to disability, and that may result in substantial savings in federal programs.
This article describes four concepts—solvency, sustainability, shortfalls, and solutions—as they apply to the financial status of the Social Security program as well as how Social Security financing fits in the general federal budget. The little-understood basis for future projected shortfalls is explained and detailed in relation to the possible solutions.
This report presents a comparison of benefits under the Galveston Plan versus Social Security, based on different earner and family scenarios. These scenarios include single and married workers at the low, middle, high, and very high earnings levels.
The Growth in Applications for Social Security Disability Insurance: A Spillover Effect from Workers' Compensation
Applications for Social Security Disability Insurance (DI) increased during the 1990s compared with the 1980s. Over that period, workers' compensation benefits for workers with permanent disabilities declined and compensability rules became more stringent. This article examines whether changes in the workers' compensation program caused part of the increase in the DI application rate during the 1990s.
We find that three factors—(1) population growth, (2) the growth in the proportion of women insured for disability, and (3) the movement of the large baby boom generation into disability-prone ages—explain 90 percent of the growth in new disabled-worker entitlements over the 36-year subperiod (1972–2008). The remaining 10 percent is the part attributable to the disability “incidence rate.” Looking at the two subperiods (1972–1990 and 1990–2008), unadjusted measures appear to show faster growth in the incidence rate in the later period than in the earlier one. This apparent speedup disappears once we account for the changing demographic structure of the insured population. Although the adjusted growth in the incidence rate accounts for 17 percent of the growth in disability entitlements in the earlier subperiod, it accounts for only 6 percent of the growth in the more recent half. Demographic factors explain the remaining 94 percent of growth over the 1990–2008 period.
The Growth in Social Security Benefits Among the Retirement-Age Population from Increases in the Cap on Covered Earnings
This article investigates how raising the maximum level of earnings subject to the Social Security payroll tax leads to the "leakage" of portions of the additional revenue into higher benefit payments. Using data from the Health and Retirement Study, the authors simulate the effects of changes in maximum taxable earnings for cohorts approaching retirement age over a 24-year period. They find, roughly, that almost half of the additional tax revenue from having raised the maximum earnings subject to the payroll tax has leaked into higher benefits.
This paper discusses some of the major issues associated with the question of whether workers receive their money's worth from the Social Security program. An effort is made to keep the discussion as nontechnical as possible, with explanations provided for many of the technical terms and concepts found in the money's worth literature. Major assumptions, key analytical methods, and money's worth measures used in the literature are also discussed. Finally, the key findings of money's worth studies are summarized, with some cautions concerning the limitations and appropriate usage of money's worth analyses.
This article discusses some of the major issues associated with the question of whether workers receive their money's worth from the Social Security program. An effort is made to keep the discussion as nontechnical as possible, with explanations provided for many of the technical terms and concepts found in the money's worth literature. Major assumptions, key analytical methods, and money's worth measures used in the literature are also discussed. Finally, the key findings of money's worth studies are summarized, with some cautions concerning the limitations and appropriate usage of money's worth analyses.
Using a 1 percent sample of Social Security Administration data, this article documents and analyzes responses in the entitlement age for old-age benefits following the recent changes in Social Security rules. Both rules, the removal of the retirement earnings test (RET) for persons who are at the full retirement age (FRA) through age 69 in 2000 or later and a gradual increase in the FRA for those who reach age 62 in 2000 or later, are expected to affect the age at which people claim Social Security retirement benefits (or entitlement age) and the work behavior of older Americans.
The Hazard of Mortality Among Aging Retired- and Disabled-Worker Men: A Comparative Sociodemographic and Health Status Analysis
Health Insurance Coverage Among Recently Entitled Disability Insurance Beneficiaries: Findings From the New Beneficiary Survey
Health Insurance Coverage of the Aged and Their Hospital Utilization in 1962: Findings of the 1963 Survey of the Aged
The Health Insurance Portability and Accountability Act of 1996 (HIPAA), enacted on August 21, 1996 (Public Law 104-19), provides for improved access and renewability with respect to employment-related group health plans, to health insurance coverage sold in connection with group plans, and to the individual market (by amending the Public Health Service Act). The Act's provisions include improvements in portability and continuity of health insurance coverage; combating waste, fraud, and abuse in health insurance and health care delivery; promoting the use of medical savings accounts; improving access to long-term care services and insurance coverage; administrative simplification; and addressing duplication and coordination of Medicare benefits.
Conventional wisdom holds that the majority of early retirees are in good health and that only a minority are in poor health. This wisdom is based on examinations of levels of health among the early retiree population. In contrast, this paper looks at both the health and mortality risk of early retirees relative to the health and mortality risk of age 65 retirees. This paper finds substantial heterogeneity among early retirees in health and mortality risk related to the age at which they are entitled to Social Security benefits. Early retirees consist of a group in extremely poor health, a group with health equal to age 65 retirees, and a group with health in between. The majority of early retirees are in poorer health and have higher mortality risk than age 65 retirees, and only a minority have health and mortality risk as good as that of age 65 retirees.
This article uses a relatively new data source—the American Community Survey (ACS) to document the economic and demographic characteristics of the Hispanic population in the United States. Although the article focuses on Social Security beneficiaries and Supplemental Security Income (SSI) recipients, other segments of the population are also examined. The ACS data show that the Hispanic population is significantly different from the overall population, particularly with regard to age distribution, education, and economic well-being.
This study uses Social Security administrative data on historical taxes and benefits by year, age, gender, and race for an ex post analysis of redistribution under the Disability Insurance program. The relationship between the taxes paid and benefits received to date under the program is described for successive cohorts as a whole and for specific race and gender groups both within cohorts and across time.
This study uses Social Security administrative data on historical taxes and benefits by year, age, gender, and race for an ex post analysis of redistribution under the Disability Insurance (DI) program. The relationship between the taxes paid and benefits received to date under the program is described for successive cohorts as a whole and for specific race and gender groups both within cohorts and across time.
Historical Redistribution Under the Social Security Old-Age and Survivors Insurance and Disability Insurance Programs
This study is the third in a series of studies that use comprehensive Social Security administrative data on past earnings and benefits by year, age, gender, and race to analyze historical redistribution across those characteristics under the Social Security program. It examines historical lifetime redistribution to date across and within cohorts born through 1927, combining and extending the results of the previous two studies, for which less historical data were available. Redistributional estimates incorporating the additional data confirm the results of the earlier studies relative lifetime redistributional outcomes to data under the DI program have generally been much more favorable for "Other Races" than for "Whites;" have generally been more favorable for females than for males in most, but not all, of the cohorts considered; and accumulated benefits have generally exceeded accumulated taxes by substantial margins for all but the earliest birth cohort groups. In contrast to outcomes under the OASI program, accumulated net transfers to date for very early birth cohorts have generally been negative under the DI program taken by itself, although the size of these negative net transfers is relatively small.
This study uses Social Security administrative data on past earnings and benefits by year, age, sex, and race to analyze historical redistribution under the Old-Age and Survivors Insurance program across and within cohorts born through the year 1922. The results generally support the findings of closely related previous research, confirming that early cohorts have received large accumulated net transfers to date, that females, as a group, have experienced substantially higher accumulated benefit/tax ratios and internal rates of return than their male counterparts in these cohorts, and that the "Other Races" group fared better by these measures than the "White" race group in most of the cohorts considered. Differences by race in the accumulated benefit/tax ratios estimated in this analysis are sensitive to the choice of the interest rate series and cohort grouping, however, and differ sharply between males and females under some of the interest rate assumptions.
Homeless People Whose Self-Reported SSI/DI Status Is Inconsistent with Social Security Administration Records
Clinicians routinely ask indigent new clients whether they receive Supplemental Security Income (SSI) payments or Social Security Disability Insurance (DI) benefits, and this information is incorporated into treatment planning. Using questionnaire responses by 7,220 homeless people with mental illness, we first determined what demographic and clinical factors were associated with reporting receipt of SSI or DI benefits and not being in the SSA database and, second, what factors were associated with reporting not receiving benefits but have SSA records indicating otherwise. The low agreement between client reports and administrative records suggests that clinicians should verify the information provided by clients, especially those who are psychotic or medically ill, because that information is often inaccurate.
Hospital Insurance, Supplementary Medical Insurance, and Old-Age, Survivors, and Disability Insurance: Financing Basis Under the 1965 Amendments
How Common is "Parking" among Social Security Disability Insurance Beneficiaries? Evidence from the 1999 Change in the Earnings Level of Substantial Gainful Activity
The authors explore the extent to which Social Security Disability Insurance (DI) beneficiaries restrain their earnings below the substantial gainful activity (SGA) level in order to maintain their cash benefits. The extent of "parking" is measured by exploiting the 1999 change in the nonblind SGA earnings level from $500 to $700 and assessing its effect on cohorts of DI beneficiaries who completed their trial work period, one of which was affected by the SGA change, and one that was not.
How Did the Recession of 2007–2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?
This article uses household wealth and labor market data from the Health and Retirement Study (HRS) to investigate how the recent "Great Recession" has affected the wealth and retirement of the Early Boomer cohort, those in the population who were just approaching retirement age at the beginning of the recession. The retirement wealth of people aged 53–58 before the onset of the recession in 2006 declined by a relatively modest 2.8 percent by 2010. For members of older cohorts, wealth had increased by about 5 percent over a comparable age span. The wealth holdings of poorer households were least affected by the recession. Relative losses were greatest for those who initially had the highest wealth when the recession began. The retirement behavior of the Early Boomer cohort looks similar, at least to date, to the behavior observed for members of older cohorts at comparable ages.
How Do Trends in Women's Labor Force Activity and Marriage Patterns Affect Social Security Replacement Rates?
Changes in the role of women in the economy and in the family have affected both the amount and the type of Social Security benefits they receive in retirement. Women's labor force participation rate increased from less than 40 percent in 1950 to more than 70 percent in 2011. Over much of the same period, marriage rates fell and divorce rates rose. This article examines how women's higher earnings and lower marriage rates have affected Social Security replacement rates over time for individuals and for households.
This article explores how individuals affected by the removal of the earnings test have changed their participation in the workforce and the amount that they earn. It also looks at changes in benefit claiming among those who have reached the full retirement age. Results are based on longitudinal data from the Social Security Administration that cover the 4 years before and after the change.
The Office of Policy recently completed an analysis of the prevalence of multirecipient households in the Supplemental Security Income (SSI) program. The study was based on Survey of Income and Program Participation (SIPP) data for December 1998 matched to administrative records from the Social Security Administration (SSA).
The onset of a work-limiting health condition may lead workers to reevaluate their lifetime work path. This article analyzes the impact of policy variables—employer accommodations, state Social Security Disability Insurance (DI) acceptance rates, and DI benefits—on the timing of DI applications for such workers.
How Post Secondary Education Improves Adult Outcomes for Supplemental Security Income Children with Severe Hearing Impairments
This article uses a unique longitudinal dataset based on administrative data from the National Technical Institute for the Deaf (NTID) linked to Social Security Administration (SSA) microdata to conduct a case study of Supplemental Security Income (SSI) children who applied for postsecondary education at NTID. The authors estimate the likelihood that SSI children who apply to NTID will eventually graduate relative to other hearing impaired applicants, as well as the influence of graduation from NTID on participation in the SSI program as adults and later success in the labor market. Findings indicate that SSI children are substantially less likely to graduate from NTID than their fellow deaf students who did not participate in the SSI program as children, but that those who do graduate spend less time in the SSI adult program and have higher age-earnings profiles than those who do not graduate.
How Raising the Age of Eligibility for Social Security and Medicare Might Affect the Disability Insurance and Medicare Program
This article considers two hypothetical scenarios—one in which the Medicare eligibility age is raised to 67 along with the scheduled increase in the normal retirement age, and one in which eligibility for both programs is raised to age 70. It then projects the effects that each of those changes would have on Social Security Disability Insurance participation, Medicare participation, and Medicare expenditures.
The authors document the steps used by the Social Security Administration (SSA) and state Disability Determination Service (DDS) agencies to make initial determinations about eligibility for Disability Insurance and Supplemental Security Income. For both adults and children, SSA/DDSs record the basis for initial disability determinations using codes that correspond to the steps of the process. The resulting data element, the Regulation Basis Code, permits researchers to distinguish allowances based on the Listings from those based on medical/vocational factors for adults (or functional factors for children). It can also be used to identify denials based on severity, residual functional capacity, or other reasons.
Despite many decades of data collection, SSA has problems presenting data on the race and ethnicity of program beneficiaries. By using several statistical techniques, however, it is possible to make better use of the data at hand.
In this article, the authors use the Health and Retirement Study to compare retirement resources of the foreign born with those of the native born. They find that immigrants have significantly lower Social Security benefit levels than natives; however, after controlling for demographic characteristics immigrants have higher levels of net worth. The immigrant/native differential in retirement resources varies systematically by number of years in the United States.
This article uses the Social Security Administration's Modeling Income in the Near Term (version 6) to examine how changes in married women's labor force participation and earnings will impact the Social Security benefits of current and future beneficiary wives. Over the next 30 years, a larger share of wives will be eligible for Social Security benefits based solely on their own earnings, and wives' average Social Security benefits are expected to increase by 50 percent. Despite rising female lifetime earnings, wives' earnings typically remain below those of their husbands, so many wives who are retired-worker-only beneficiaries while their husbands are alive will receive auxiliary benefits when their husbands die.
Impact of Inflation on Private Pensions of Retirees, 1970–74: Findings From the Retirement History Study
This report examines the impact of local labor market characteristics on three steps in the disability process: The perception of oneself as disabled; the decision to apply for benefits under the social security disability insurance program (SSDI); and the determination of disability status under SSDI. The research attempts to determine whether the elements of an individual's local economic environment play a role in the various steps of the disability process specifically above and beyond his or her own demographic characteristics and economic motivations. Among the key variables used to measure the local economic environment are the unemployment rate, the percent of families below the low income (poverty) level, rural location, occupational diversity and the percent of the unemployed exhausting their unemployment benefits. With the exception of the last variable, which is measured on a statewide basis, all variables pertain to the county of residence.
The results contradict earlier findings which were based on aggregated data. No significant effect on any of the three elements in the disability process was found for either variable measuring the dimensions of the unemployment problem. With few exceptions, results from the other labor market variables were sketchy at best. One surprising result is noted with respect to the benefit replacement ratio, the variable intended to measure the relative attractiveness of SSDI benefits.
This article summarizes an analysis of the poverty implications of repealing the retirement earnings test (RET). Repealing the RET at the normal retirement age or older is unlikely to generate large poverty effects. Removing the test at age 62 or older, however, could lead to large increases in poverty.
The Impact of Response Error on Participation Rates and Contributions to Defined Contribution Pension Plans
The accuracy of information about coverage and contributions to defined contribution (DC) pension plans is important in understanding the economic well-being of future retirees because these plans are an increasingly important part of retirement income security. Using data from the 1996 and 2004 panels of the Survey of Income and Program Participation (SIPP) merged with information from W-2 tax records, we examine the extent to which estimated participation rates and contribution amounts to DC plans derived from SIPP reports differ from estimates obtained from tax-deferred contributions in the W-2 tax records.
The income of the aged is composed largely of Social Security benefits, asset income, and pension income. Over the past three decades, the primary form of employer-sponsored pension has shifted from the traditional defined benefit plan to defined contribution plans, such as the 401(k). That trend creates problems for measuring the income of the aged because most household surveys of income either do not collect information about distributions from defined contribution retirement accounts or do not include those distributions in their summary measures of income. This article examines the impact of including distributions from retirement accounts on the estimated income of families headed by persons aged 65 or older.
The Impact of Survey Choice on Measuring the Relative Importance of Social Security Benefits to the Elderly
This article provides insight into how measures of elderly economic well-being are sensitive to the survey data source. In Social Security Administration's publication Income of the Population 55 or Older, data are based on the national Current Population Survey (CPS). The preciseness of the survey statistics depends upon the willingness and ability of CPS respondents to answer questions accurately. This article contrasts income statistics calculated using the CPS and the Survey of Income and Program Participation (SIPP). Administrative data for Social Security benefits and SSI are also used to evaluate the accuracy of the income estimates.
The Impact of the Unit of Observation on the Measurement of the Relative Importance of Social Security Benefits to the Elderly
Other publications using the same data source as Income of the Population 55 or Older, 2004 have produced different statistics for income and the relative importance of Social Security that appear contradictory. Depending on the unit of observation and whose income is considered, the estimates of the percentage of the elderly receiving all of their income from Social Security in 2004 varies from 13 percent to 22 percent. This article explains how the choice of the unit of observation impacts measures of the relative importance of Social Security benefits for the elderly.
Implementation and Analysis of Public Law 98-460—Section 1619 (The Social Security Disability Benefits Reform Act of 1984)
The Implications of Marital History Change on Women's Eligibility for Social Security Wife and Widow Benefits, 1990–2009
Social Security retirement-age benefits in the United States reflect marital histories and lifetime earnings of current and former married couples. We examine women's marital history patterns and spouse and widow benefit eligibility over the past two decades, 1990 and 2009. Our analysis reveals substantial changes in women's marital patterns among the baby boom and generation X cohorts. We find a substantial decline in qualifying marital histories for Social Security spouse and widow benefits. The results reveal considerable variation by race and Hispanic origin.
This article examines child support provisions in the Supplemental Security Income (SSI) program and other means-tested programs. It also discusses policy options for improving receipt of child support for children receiving SSI and ways that SSA could gain better access to child support data.
Improving Return-to-Work Strategies in the United States Disability Programs, with Analysis of Program Practices in Germany and Sweden
This article examines suggestions by the General Accounting Office (GAO) to improve the rate of rehabilitation of workers on the disability rolls. It examines GAO's suggestions within the context of research by experts on return-to-work practices in Germany, Sweden, and the United States. It also discusses lessons learned from the European experiences and current and past return-to-work initiatives used in the Social Security Disability Insurance and Supplemental Security Income programs.
Income Changes At and After Social Security Benefit Receipt: Evidence From the Retirement History Study
This paper estimates effects on elderly poverty rates of a steady growth in incomes for 50 years. It assumes that the poverty threshold continues to be adjusted for inflation but not for increases in real incomes. Simulations with the March 1998 Current Population Survey indicate that if Social Security and Supplemental Security Income (SSI) benefit rules are not changed and if earnings and other incomes grow by 1 percent per year (the growth rate in earnings assumed in the Social Security Trustees' Report intermediate scenario) in an otherwise unchanging population, poverty among the elderly will decrease from 10.5 percent to about 7.7 percent in 2020 and to 4.8 percent in 2047. Those projected poverty rates are quite sensitive to the earnings growth rate assumption and to the assumption that benefits are not further reduced to maintain solvency. The paper quantifies the sensitivity to these assumptions and discusses several other aspects that might affect future poverty rates—changes in other income components like SSI, earnings, and pensions; changes in longevity and marital patterns; and changes in the distribution of earnings.
This article estimates effects of future growth in income on the poverty rates of the elderly. If real earnings and other income were to increase steadily at 1 percent per year, poverty among the elderly, 10.5 percent in 1997, would decrease to about 7.2 percent in 2020 and to 4.1 percent in 2047, assuming no Social Security benefit reductions to maintain solvency. The article discusses several other aspects that might affect future poverty rates, including changes in other income components like Supplemental Security Income, earnings, and pensions; changes in longevity and marital patterns; and changes in the distribution of earnings.
Income of New Disabled-Worker Beneficiaries and Their Families: Findings From the New Beneficiary Survey
Income of New Retired Workers by Age at First Benefit Receipt: Findings From the New Beneficiary Survey
Income of New Retired Workers by Social Security Benefit Levels: Findings From the New Beneficiary Survey
Income of Old-Age and Survivors Insurance Beneficiaries: Highlights from Preliminary Data, 1957 Survey
It is becoming increasing difficult worldwide for the aged to sustain a minimum level of income protection into retirement. Rapidly aging populations and lower fertility rates are creating serious fiscal strains on current social insurance systems. A report issued by the World Bank maintains that countries whose primary mechanism for providing old-age income protection is a publicly managed social insurance system will experience significant difficulties unless they make structural changes in their programs. Actuarial estimates indicate that benefit payments in the United States could in fact exceed income to the Old-Age and Survivors Insurance (OASI) Trust Fund by 2029 and a variety of proposals to address this problem are being advanced. We suggest a framework to evaluate such proposals based on a set of core values (fairness, adequacy, and efficiency) and analyze some of the proposed changes both in relation to how they have been employed in other countries and within the context of the framework. The purpose of this article is to inform and help structure a most important debate.
Income typically falls in retirement, and the timing and extent of that decline concerns policymakers. If income from Social Security, pensions, and savings do not allow retirees to maintain their desired standard of living, they will face difficult and perhaps unexpected choices about reducing or eliminating certain kinds of expenditures. The income replacement ratio—retirement income expressed as a percentage of preretirement income—has become a familiar metric for assessing the adequacy of retirement income. This article presents the income replacement ratios experienced by members of the original sample cohort of the Health and Retirement Study (HRS), who were born between 1931 and 1941. Median replacement ratios among this sample fall as the retirement period grows longer.
Income Security in Transition for the Aged and Children in the Soviet Union and in the Russian Federation
Income, Assets, and Health Insurance: Economic Resources for Meeting Acute Health Care Needs of the Aged
This paper examines the money incomes of the elderly and the nonelderly. The economic status of the elderly is put in perspective by discussing changes in real incomes since 1967 and the income of the elderly relative to the incomes of other age groups. Detailed age groups within both the elderly and nonelderly groups are examined. The paper finds that the economic status of the elderly in 1992 was substantially better than in 1967 but was about the same as in 1984. The real median income of the elderly rose from 1967 to 1989 but fell from 1989 to 1992. The ratio of the income of the elderly to that of the nonelderly was higher in 1992 than in 1967, but the 1992 ratio was below the 1984 ratio. Large increases in mean Social Security benefits were important in the increase in the total income of the elderly since 1967.
This article examines the money incomes of the elderly and the nonelderly. The economic status of the elderly is put in perspective by discussing changes in real incomes since 1967 and the income of the elderly relative to the incomes of other age groups. Detailed age groups within both the elderly and nonelderly groups are examined. The article finds that the economic status of the elderly in 1992 was substantially better than in 1967, but was about the same as that in 1984. The real median income of the elderly rose during the period from 1967 to 1989, but declined from 1989 to 1992. The ratio of the income of the elderly to that of the nonelderly was higher in 1992 than in 1967, but the 1992 ratio was lower than that in 1984. Large increases in mean Social Security benefits were important in the increase in the total income of the elderly since 1967.
Complementing the second paper's focus on forecasting immigrant earnings and emigration in a "closed system" for a given population, the last article of the trilogy explores how to project immigrant earnings for an "open system"—a system that includes future immigrants. A simple method to project future immigrants and their earnings is presented.
Higher labor force participation rates for people aged 62–79 are associated with a dramatic increase in the share of their total money income attributable to earnings. For persons aged 65–69, the earnings share increased from 28 percent in 1980 to 42 percent in 2009. Two decades ago, Social Security benefits and earnings were roughly equal shares of total money income (about 30 percent); the earnings share is now more than 12 percentage points larger. The marked increase in the importance of earnings as an income source is also evident throughout the 62–79 age range among Social Security beneficiaries.
Increasing the Social Security Retirement Age: Older Workers in Physically Demanding Occupations or Ill Health
To date, more than 30 countries have established some form of individual accounts in their retirement systems. This article identifies those countries, categorizes how the individual accounts fit into their retirement income systems, and identifies some basic characteristics of the accounts. Because this analysis of individual accounts is intended to inform the current United States debate involving Social Security, the discussion is limited to countries in which such accounts are part or all of a mandatory retirement income program.
This article uses the New Beneficiary Data System to describe the first job held after award of Disability Insurance benefits, in terms of occupation and industry. It examines work activity within sectors of employment, and looks at the issues of whether work return in certain industries and occupations varies according to the demographic characteristics of the beneficiaries. The article also presents data on sector-specific employer accommodations that can aid in sustained work return.
Postentitlement work was fairly evenly distributed across occupational and industrial sectors. Persons with higher levels of educational attainment were found to be in white-collar employment sectors. There were noticeable differences in the availability of employer accommodations across postentitlement occupations and industries.
This paper examines the effect of inflation on private pension saving. The role that private pensions can or should play in providing income in old age in the current inflationary environment is an important policy issue. A number of studies have discussed the effect of inflation on pensions. This study extends the existing analysis and presents the first empirical estimates. Inflation is seen to have a large negative effect on this aspect of retirement saving by workers.
The Influence of Federal and State Maximums on Grants Approved for Aid to Dependent Children in 1937-38
This is the second of two articles on the effects of Old-Age Disability Insurance (OASDI) and Supplemental Security Income (SSI) payments on the poverty status of children. Based primarily on a data file from the 1990 SIPP matched with Social Security Administration (SSA) administrative records, the principal findings in the article are that: (1) the families of children who were entitled to survivors benefits, and in particular those families in which the surviving parent was remarried, were much less likely to have income below the poverty threshold than other families with children who received OASDI benefits; (2) families with a child eligible for SSI payments, and headed by a single adult, received considerably less income from earnings, and had less income overall, than other families with children that received SSI payments; and (3) the primary reason that some families who received OASDI and SSI benefits remained in poverty was the absence of any employed family member.
Introduction and Overview from—2004 Annual Report of the Board of Trustees of the Federal OASDI Trust Funds
The full report is available at http://www.socialsecurity.gov/OACT/TR/TR04.
Introduction and Overview from—2005 Annual Report of the Board of Trustees of the Federal OASDI Trust Funds
The full report is available at http://www.socialsecurity.gov/OACT/TR/TR05.
Introduction and Overview of the 2009 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds
The Board of Trustees reports each year on the current and projected financial condition of the Social Security program, which is financed through two separate trust funds: the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund. The introduction, overview, and full report are available here.
Introduction and Overview of the 2010 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds
The Board of Trustees reports each year on the current and projected financial condition of the Social Security program, which is financed through two separate trust funds: the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund. The introduction, overview, and full report are available here.
Introduction and Overview of the 2011 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds
The Board of Trustees reports each year on the current and projected financial condition of the Social Security program, which is financed through two separate trust funds: the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund. The introduction, overview, and full report are available here.
Introduction and Overview of the 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds
The Issue Unresolved: Innovating and Adapting Disability Programs for the Third Era of Social Security
The history of the Social Security programs in the United States falls into several distinct eras, defined by changing social, demographic, and economic conditions. At present the retirement components of these programs is moving into a stage of program maturation, which poses certain relatively well-understood changes to policymakers. The disability programs are also moving into the same set of societal conditions, but their impact is considerably more difficult to predict. Already disability incidence rates have experienced disturbingly large and poorly understood shifts. Developing a way to predict these shifts and to deal with the challenges that they make for existing programs is therefore a major priority of Social Security's current research agenda.
This article presents basic findings about the job patterns of disabled-worker beneficiaries covered under the Social Security Administration's Disability Insurance (DI) program as reported in the New Beneficiary Follow-up survey. Beneficiaries are asked retrospective questions about labor-force participation from the time of their first entitlement to disability benefits to the time of the interview.
Twelve percent of those persons who enter the DI program as nonworking beneficiaries start a job during their entitlement to benefits. The mean time to the start of the job was 3.4 years. Of those who start a job, 50 percent end the job before the end of their entitlement. Most of these persons leave the job for health-related reasons and, for most of them, the employer does not play a major role in their decision to stop working. For those who end the first job and are employed in subsequent jobs, the percentage who recover while still in the job decreases as the number of jobs increases.
This paper examines the economic well-being of age groups in the U.S. using data on both income and wealth. Although income will be discussed, we will focus on wealth in order to exploit relatively current data on wealth that have become available recently.
On July 1, 2007, New Zealand introduced KiwiSaver, a new subsidized retirement savings plan. All new entrants to the labor force and anyone starting a new job are automatically enrolled in a plan and may opt out if they wish. Anyone younger than age 65, including the self-employed and anyone not in the labor force, may choose to set up a KiwiSaver account. The government provides tax credits for both employer and account holder contributions, a one-time tax-free payment to each account, and an annual fee subsidy to defray administrative costs.
Between 1970 and 1983, the rate at which the elderly were hospitalized grew by over 40 percent, but the rate of hospitalization for the younger population was fairly stable. Past attempts to explain the different patterns among the young and the old have focused on technology, insurance, health status, and the supply of hospital services. These attempts have been largely unsuccessful. In this paper, I examine other possible explanations, namely, that the elderly, who experienced a decline in the rate of participation in the labor force and an increase in income over this period, used increases in available time (i.e., nonwork time) and increases in income to seek out and receive greater amounts of health care.
Using an empirical strategy that adequately controls for the health status and insurance status of the subjects under study, I analyze small area data from the state of North Carolina. This approach yields results that indicate labor force status and income are important determinants of hospital use among the elderly.
There is empirical evidence that in the recent past the Old-Age Insurance portion of the Social Security program has acted as a net wage subsidy. In addition, the program had significant intragenerational redistributive effects. Our purpose is to demonstrate how these findings alter conventional views of the labor supply effects of Social Security. Our method is the analysis of a labor supply model that is extended to include empirically significant operational components of the program. We show that the analyses of others are special cases of our more general approach.
Labor-Force Participation and Earnings of SSI Disability Recipients: A Pooled Cross-Sectional Time Series Approach to the Behavior of Individuals
This article examines two important aspects of work behavior, labor-force participation, and earnings among persons who since 1976 have become entitled to SSI disability benefits and received payments for a full calendar year or longer during the intervening time period. A data set was developed containing the records of a random sample of all individuals who had ever received Supplemental Security Income (SSI) disability benefits and matched to earnings records maintained by the Social Security Administration (SSA). A multivariate analysis based on a pooled cross-sectional time series approach was employed using individual-level data to first estimate the probability of an SSI recipient performing work and then to estimate, among those who worked, the level of earnings. For this analysis, the SSI population was divided into three distinct groups based on their diagnosis: the nondevelopmentally disabled, the developmentally disabled (other than the mentally retarded), and the mentally retarded.
The analysis provides information about the impact that individual characteristics (such as age, education, diagnosis, and so forth) play in the decision to work and in determining the level of earnings. The analysis also addresses yearly variations in labor-force participation and earnings.
The Social Security Protection Act of 2004 (SSPA), with its administrative remedies and program protections, can be seen as another incremental step in the development of a social insurance program that best meets the evolving needs of American society. This article discusses the legislative history of the SSPA in detail. It also includes summaries of the provisions and a chronology of the modification of these proposals as they passed through the House and Senate, and ultimately to the president's desk.
This article details the congressional effort to recognize the important contributions of Filipino veterans in World War II that led to the enactment of a new title VIII of the Social Security Act, "Special Benefits for Certain World War II Veterans." It describes the evolution of a proposal to pay a reduced Supplemental Security Income (SSI) benefit to Filipino and other World War II veterans who want to return to their homeland or otherwise live outside the United States. The article highlights the different options considered and the early implementation of payments by the Social Security Administration under the new program. Title VIII is the first benefit program administered by the Social Security Administration since the enactment of the legislation that created the SSI program in 1972.
This article analyzes duration on the Supplemental Security Income (SSI) disability rolls prior to age 65 among children and working-age adults, based on a 10-year followup of 1974-82 cohorts of new awardees by utilizing monthly data from administrative records for 1974-92, and on statistical projections beyond the followup period. Although SSI means testing is responsible for a high proportion of early suspensions, when multiple spells are accounted for, long stays dominate. The estimated mean length of all first SSI spells is 5.5 years. It is 11.3 years for disabled children, 1.3 years for disabled adults eligible for both the Social Security Administration's Disability Insurance (DI) and SSI, and 6.4 years for adults eligible for SSI only. When multiple spells are accounted for, the projected mean total preretirement-age SSI disability stay almost doubles to 10.5 years for all awardees and increases to 26.7 years for children.
In this paper we focus on the relationship between a woman's economic status earlier in life and her poverty status in old age. Previous research on the determinants of poverty among aged women has documented the socioeconomic and demographic correlates of the poor and has examined the financial impact of adverse late-life events such as widowhood, deterioration of health, and loss of employment. Using data from the National Longitudinal Survey of Mature Women, we find that most women who experience these types of adverse events in their later years do not become poor and that a large majority of older NLSMW respondents who were poor in 1991–92 were poor earlier in their adult lives. Whether women are impoverished by adverse late-life events depends on their economic resources just prior to the event. But the financial resources available in old age, in turn, depend very much on their long-term economic status throughout much of their adult lives. This article underscores the fact that for most older women these adverse events do not appear to precipitate poverty spells—at least not within the first couple of years—and directs attention at longer-term circumstances that make some women more vulnerable.
This article focuses on the relationship between women's economic status earlier in their lives and their poverty status in old age. Previous research on the determinants of poverty among aged women has documented the socioeconomic and demographic correlates of the poor, and has examined the financial impact of adverse later-life events such as widowhood, deterioration of health, and loss of employment. Using data from the National Longitudinal Survey of Mature Women (NLSMW), we find that most women who experience these types of adverse events in their later years do not become poor and that a large majority of older NLSMW respondents who were poor in 1991-92 were poor earlier in their adult lives. Whether women are impoverished by adverse later-life events depends on their economic resources just prior to the event. But, the financial resources available in old age, in turn, depend very much on their long-term economic status throughout much of their adult lives. This article underscores the fact that for most older women, these adverse events do not appear to precipitate poverty spells—at least not within the first couple of years—and directs attention at longer term circumstances that make some women more vulnerable to poverty.
One-period models predict that a substantial welfare gain would result from removing the Social Security earnings test. In this paper we show that such models overestimate the size of potential gains.
If one uses instead a two-period model, which captures intertemporal effects, the net result of removing the earnings test is ambiguous. In the presence of a personal income tax, workers who reduce their labor supply in the first period create a welfare loss that must also be considered. We use a present-value model to estimate the change in lifetime welfare. We find that the net potential gain from removing the earnings test is probably small, especially when compared with the alternative of an increased personal income tax.
This article presents three measures of the distributional effects of Social Security benefits on actual and projected retirement income of workers born between 1931 and 1960. Microsimulations take into account marital history, the sharing of incomes and tax burdens within couples, and differences in life expectancy among subgroups of the population. More important than changes in tax rates or benefits are changes in the demographics and earnings patterns of the workforce, particularly the higher lifetime covered earnings of women. The growing share of women receiving worker benefits instead of spouse or survivor benefits, plus the increased proportion of retirees who are divorced, make Old-Age and Survivors Insurance (OASI) benefits more progressive, even in the face of declining net benefits.
Lifetime Earnings Patterns, the Distribution of Future Social Security Benefits, and the Impact of Pension Reform
Policymakers have long been interested in understanding the adequacy and distribution of Social Security benefits and in predicting the effects of reform on representative workers. This article describes two new methods for estimating the career profile of earnings for representative workers. It then compares the results of those new methods with earnings profiles assumed in traditional distributional analysis of Social Security and shows the implications of the new results for evaluating Social Security reform.
Issues addressed in this article include the adequacy of household retirement saving, controlling for lifetime earnings levels and uncertainty, and the examination of the role of Social Security in bolstering financial security. The authors show that reductions in Social Security benefits could have significant deleterious effects on the adequacy of saving, especially among low-income households. They also show that, controlling for lifetime earnings, households with high current earnings tend to save far more adequately than do other households.
This article provides a brief overview of the more important studies of lifetime redistribution under the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) programs. Studies are categorized into two types, those that focus on redistribution across successive cohorts of workers or typical members of those cohorts and those that focus on the distribution of results across characteristics of interest within particular cohorts of workers. A list of related studies is provided at the end of the article for those interested in additional reading.
This paper provides a brief overview of the more important studies of lifetime redistribution under the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) programs. Studies are categorized into two types: those that focus on redistribution across successive cohorts of workers or typical members of those cohorts, and those that focus on the distribution of results across characteristics of interest within particular cohorts of workers. A list of related studies is provided at the end for those interested in additional reading.
The Health and Retirement Study (HRS is a major longitudinal study designed for scientific and policy researchers for study of the economics, health, and demography of retirement and aging. This note describes the data from SSA records that have been released for linking to HRS data, linkage rates resulting from the consent process, and subgroup patterns in linkage rates.
The Health and Retirement Study (HRS) is a major longitudinal study designed for scientific and policy researchers for study of the economics, health, and demography of retirement and aging. The primary HRS sponsor is the National Institute of Aging, and the project is being conducted by the Survey Research Center of the Institute for Social Research at the University of Michigan. Several agencies, including the Social Security Administration, are supporting the project. This is the second paper describing SSA's data support for the HRS. It describes the data from SSA records that have been released for linking to HRS data, linkage rates resulting from the consent process, and subgroup patterns in linkage rates.
This article presents an overview of two projects in the Social Security Administration's Youth Transition Demonstration: California's Bridges to Youth Self-Sufficiency and Mississippi's Model Youth Transition Innovation. We describe the projects' organization and the services they delivered. We also provide statistics on earnings and Supplemental Security Income and Social Security Disability Insurance receipt 5 years after project enrollment and provide case studies of two project participants.
In this paper, the author uses the 1973 cross-sectional Current Population Survey (CPS) matched to longitudinal Social Security administrative data (through 1998) to examine the relationship between retirement age and mortality for men who have lived to at least age 65 by 1997 or earlier. Logistic regression results indicate that controlling for current age, year of birth, education, marital status in 1973, and race, men who retire early die sooner than men who retire at age 65 or older. A positive correlation between age of retirement and life expectancy may suggest that retirement age is correlated with health in the 1973 CPS; however, the 1973 CPS data do not provide the ability to test that hypothesis directly.
The Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds reports on the current and projected future financial status of the trust funds annually. The Trustees project trust fund finances 75 years into the future. Mortality is one key demographic assumption that feeds into these long-range projections. This article reviews a range of predictions about long-term mortality improvement and assesses where the Trustees' 75-year mortality projection falls within this range. In general, the predictions of future mortality declines in the 2004 Social Security Trustees Report tend to be in the mainstream of professional actuarial and international official government opinion and to be lower than the majority of the small group of demographers who produce comparable estimates.
This article updates one that appeared in the Bulletin in July 1990. It describes living arrangements of persons receiving payments under the Supplemental Security Income (SSI) program from October 1994 through September 1995. The data were taken from the Quality Assurance review conducted by the Social Security Administration (SSA). This procedure is used by SSA to determine the frequency and causes of incorrect determinations of eligibility and payment amounts.
It is difficult to describe the living arrangement for the "typical" recipient. Nevertheless, some interesting patterns emerge in an analysis of the data. About 59 percent (owners and renters combined) of the 6.3 million SSI recipients lived in their own households. Approximately 32 percent of them shared a living arrangement with someone else and about 5 percent of the recipients lived in an institution.
Of those SSI recipients living in households, about 36 percent lived alone. Less then 13 percent lived with only their spouses or with only their spouses and minor children. Approximately 11 percent of those in households were child recipients living with parents. An additional 15 percent of the SSI recipients lived in households with only other related adults (other than a spouse or parents).
Using data from the 2004–2006 National Beneficiary Surveys matched to Social Security administrative data, this study follows a cohort of disability beneficiaries participating in the Ticket to Work program for several years to assess changes in their service use, health status, employment, and income.
This article analyzes the effect of longitudinal interactions between the Disability Insurance (DI) and Supplemental Security Income (SSI) programs in providing access to Medicare and Medicaid, using a sample of administrative records spanning 84 months. Our study is the first effort to link and analyze record data on participation in all four of these major, and highly interrelated, public benefit programs in the United States. We find that SSI facilitates high levels of Medicaid coverage for SSI awardees overall and provides access to Medicaid for many DI awardees during the 24-month Medicare waiting period. Many people who exit SSI retain their Medicaid coverage, but the gap in coverage between continuing SSI participants and those who leave the program increases over time. After Medicare kicks in, public health insurance coverage is virtually complete among awardees with some DI involvement, including dual Medicaid and Medicare coverage for some.
Longitudinal Patterns of Participation in the Social Security Disability Insurance and Supplemental Security Income Programs for People with Disabilities
We analyze longitudinal interactions in benefit eligibility between the Disability Insurance and Supplemental Security Income programs and the lags arising from processing time in receiving the first payment, based on Social Security administrative records. We find that longitudinal interactions enhancing the bundle of cash benefits available for awardees over a 60-month period is much more common than apparent from cross-sectional data and identify distinct patterns of longitudinal interactions between the two programs. SSI plays an especially important role in providing benefit eligibility during the 5-month DI waiting period. Transition to nonbeneficiary status is more prevalent among SSI awardees because of exits attributable to the SSI means test. We also find that there is substantial variation in the lag in receiving the first disability payment.
Longitudinal Statistics on Work Activity and Use of Employment Supports for New Social Security Disability Insurance Beneficiaries
Longitudinal statistics on the employment activities of Social Security Disability Insurance beneficiaries offer a different perspective than the Social Security Administration's published statistics, which are based on annual data, and have important policy implications.
A rigorous 6-year evaluation of transitional employment services indicates that the services can substantially increase the employment and earnings of Supplemental Security Income (SSI) recipients who have mental retardation. The evaluation examined the Social Security Administration's Transitional Employment Training Demonstration, which operated from 1985 to 1987. Our estimates indicate the demonstration services raised the average employment and earnings levels for mentally retarded SSI recipients who were offered the services. Furthermore, the estimates show that these increases persisted relatively undiminished over the 6 years after recipients entered the demonstration. Because average SSI payments for the group fell only slightly during the 6 years, the participants' average income rose. The rise in income, together with increases in work activity and community integration, suggests that the overall well-being of the participants increased because of the services. Our evaluation also suggests that transitional employment services benefit society as a whole because the earnings gains combined with the likely cost savings from reduced use of other services exceed the costs of the transitional employment services.
Low Levels of Retirement Resources in the Near-Elderly Time Period and Future Participation in Means-Tested Programs
This article describes the de facto standards of low income and resources reflected in the eligibility standards of the largest means-tested programs that serve the elderly and then applies these standards to a near-elderly cohort. Through juxtaposing retirement resources in the near-elderly time period with program participation in the elderly time period, the author indirectly examines some of the changes between the two time periods that could affect program eligibility, including spend-down of resources and marital dissolution. Retirement resource levels are estimated using the Survey of Income and Program Participation, and subsequent participation in one of the means-tested programs—Supplemental Security Income (SSI)—is examined using matched administrative records.
In late 1977, the U.S. Congress passed Social Security legislation that included a series of increases in the payroll tax. These increases, which began in 1979 and carry on into the 1980s, substantially raise the projected levels of the Social Security trust funds. Since the amendments were passed, there has been some discussion and several proposals to roll back part of the tax. It is highly likely that additional rollback proposals will be made in the near future. The purpose of this paper is to shed some light on some of the macroeconomic effects of a payroll tax rollback.
Managing Independence: The Governance Components of the National Railroad Retirement Investment Trust
This article reviews the management components of the National Railroad Retirement Investment Trust (NRRIT) and their relationship to political independence. Centralized equity investment is sometimes proposed as a method for improving Social Security program financing and, echoing the debate over the NRRIT, politicized investment decisions are seen as one potential obstacle to the policy's success. This article does not advocate for or against investing Social Security's trust fund assets in equities, but examines the NRRIT's structure and experience to provide background information for policymakers.
A Mathematical Demonstration of the Pareto Optimality of Pay-As-You-Go Social Security Programs in a Closed Economy
A 1989 article by Breyer concludes that it is impossible to compensate pensioners in the transition from a pay-as-you-go public pension system to a privatized or funded system without making at least one later generation worse off; Breyer reaches this conclusion in the context of a simple overlapping generations model of a closed economy under the assumption that the transition results in increased saving by workers. Although this conclusion is correct under the increased saving assumption in the relevant domain of the production function, the proof that Breyer provides is not sufficient to establish that fact. This note extends Breyer's analysis to provide a sufficient proof.
A long-term disability reflects the interaction between a continued physical or mental impairment that limits functioning and restrictions and requirements of the social environment. Impairments and functional limitations are, however, central to any disability, and the Social Security Administration is constructing measures to assess the impact these factors have on the development of disability.
In particular, SSA is interested in work disability or loss of or reduction in the ability to work. The functional capacity index presented in this paper was developed for that purpose. Based on a model prevalent in the literature, the index is an attempt to represent the underlying medically related aspects of disability in contrast to other factors such as the person's age, educational level, or work history.
Measurement Issues Associated with Using Survey Data Matched with Administrative Data from the Social Security Administration
Researchers using survey data matched with administrative data benefit from the rich demographic and economic detail available from survey data combined with detailed programmatic data from administrative records. This article focuses on survey data matched with administrative data from the Social Security Administration and addresses the strengths and weaknesses of each in four specific areas: program participation and benefits, disability and health information, earnings, and deferred compensation The article discusses the implications of these strengths and weaknesses for decisions that researchers must make regarding the appropriate data source and definition for the concepts in question.
Measures of Health and Economic Well-Being Among American Indians and Alaska Natives Aged 62 or Older in 2030
This Research and Statistics Note uses Modeling Income in the Near Term (MINT) projections to provide an overview of the demographic, health, and economic characteristics of the American Indian and Alaska Native (AIAN) population aged 62 or older in 2030. MINT projects that the AIAN population will fare worse than the overall aged population in 2030 according to measures of health status, work limitation status, disability status, lifetime earnings, per capita Social Security benefits, per capita income, per capita wealth, and poverty.
Provided is a discussion of the cumulative effects of the measurement alternatives described in the three previous articles: considering family income of persons rather than aged units, using administrative data in place of survey reported data, and switching the data source from CPS to SIPP. The current-methodology CPS statistic of 17.9 percent of beneficiary aged units receiving all of their income from Social Security in 1996 falls to a substantially smaller estimated 4.5 percent of elderly beneficiary persons based on family income when using the SIPP and Social Security administrative data.
Medical Services Provided Under Prepayment Arrangements at Trinity Hospital, Little Rock, Arkansas, 1941
Out-of-pocket medical costs are concentrated at the end of life. At the same time, poverty is three to four times more common among elderly widows than among similarly aged married women. When the possible relationship between these two facts are explored, out-of-pocket medical spending in the months before death is found to be large relative to income and could thus negatively affect the financial well-being of the surviving spouse. Simulations investigate the extent to which expansions in insurance coverage to include nursing home care, long hospital stays, or prescription drugs could improve the financial outcomes for widow(er)s.
In response to a Congressional mandate, SSA tested six different techniques to increase enrollment in programs that pay some Medicare expenses, such as premiums, for low-income individuals. This article describes these outreach projects, provides estimates of the eligible population, and discusses what could be expected for future efforts based on the results of the project.
This paper summarizes the work completed by SSA, with substantial assistance from the Brookings Institution, RAND, and the Urban Institute, for the Modeling Income in the Near Term (MINT I) model. In most cases, several methods of estimating and projecting demographic characteristics and income were researched and tested; however, this appendix describes only those methods eventually used in the MINT I model.
Military veterans constitute an important subgroup of Social Security beneficiaries. Because veterans are a large subgroup of Social Security beneficiaries and because policymakers have shown a clear interest in their well-being, it is important to understand how veterans and their dependents are currently faring. This note looks at the characteristics and trends in growth of the veteran and Social Security populations.
About one out of every four adult Social Security beneficiaries has served in the United States military, making military veterans and their families an important group to study. This article provides information on the demographic characteristics of military veterans, including their age, sex, marital status, education, and race and ethnicity. It also examines their economic status by looking at poverty levels and Social Security benefit payments. Information is based on data from the March 2004 Current Population Survey, a large, nationally representative survey of U.S. households.
More than one 1 of 5 adult Social Security beneficiaries has served in the military, and veterans and their families comprise 35 percent of the beneficiary population. Using data from the March 2010 Current Population Survey (CPS), this article presents the sociodemographic characteristics of the veteran beneficiary and the total veteran populations. The article draws comparisons with findings from the March 2000 CPS and the March 2004 CPS, and describes trends in the size and demographic makeup of the veteran population using data from the Department of Veterans Affairs' VetPop2007 projection model.
Mind the Gap: The Distributional Effects of Raising the Early Eligibility Age and Full Retirement Age
Policymakers have proposed increases to the early eligibility age (EEA) and/or full retirement age (FRA) to address increasing life expectancy and Social Security solvency issues. This analysis uses the Social Security Administration's Modeling Income in the Near Term (MINT) model to compare three retirement-age increases suggested by the Social Security Advisory Board: (1) increase the FRA alone, (2) increase both the EEA and FRA to maintain a 4-year gap between them, and (3) increase both the EEA and FRA to maintain a 5-year gap between them. This distributional analysis shows the impact these varying reforms would have on Social Security beneficiaries in the future.
This report addresses how individuals from various racial and ethnic groups fare under the current Social Security system. It examines the relative importance of Social Security for these individuals and how several aspects of the system affect them.
The retirement earnings test (RET) is an often-misunderstood aspect of the Social Security program. Policymakers have proposed reforming the RET as a way to encourage working at older ages. However, this could also cause earlier benefit claiming. We use Modeling Income in the Near Term data to analyze the complete repeal of the earnings test for beneficiaries aged 60 or older, first assuming no behavioral responses to repeal and secondly assuming changes to benefit claiming and workforce participation behaviors. Our lifetime results show that the assumed behavioral response—particularly the benefit claiming change—has a bigger effect than the RET policy change itself.
We model the Social Security Administration's (SSA's) disability determination process using household survey information exact matched to SSA administrative information on disability determinations. Survey information on health, activity limitations, demographic traits, and work are taken from the Survey of Income and Program Participation (SIPP). We estimate a multistage sequential logit model, reflecting the structure of the determination procedure used by State Disability Determination Services agencies. The findings suggest that the explanatory power of particular variables can be appropriately ascertained only if they are introduced at the relevant stage of the determination process. Hence, as might be expected by those familiar with the process, medical variables and activity limitations are major factors in the early stages of the process, while past work, age, and education play roles in later stages. The highly detailed administrative information on outcomes at each stage allows clarification of the roles of particular variables. Planned future work will include policy estimates, such as the number of persons in the general population eligible for the disability programs, as well as analysis of applications behavior in a household context.
This article presents the Supplemental Security Income (SSI) Financial Eligibility Model developed in the Division of Policy Evaluation of the Office of Research, Evaluation, and Statistics. Focusing on the elderly, the article simulates five potential changes to the SSI eligibility criteria and presents the effects of those simulations on SSI participation, federal benefits, and poverty among the elderly. Finally, the article discusses future directions for research and potential improvements to the model.
The absence of a correlation between age-adjusted death rates and the average income levels of economically developed countries has led researchers to conclude that income does not affect the mortality levels of economically developed countries. The mortality experiences of the former Soviet Union and some of the eastern European countries have further brought into question the importance of income's distribution in determining mortality among economically developed countries; prior to its breakup, the income distribution of the Soviet Union was as equal as that of Sweden, yet the life expectancy of the Soviets has been dramatically shorter than that of the Swedes. Using insights from a longitudinal microanalysis of U.S. mortality, this study presents evidence that, even for economically developed countries, the income distribution of a nation is an important determinant of its mortality. The results of this study also suggest that the relatively unequal income distribution of the United States is an important contributing factor to its low life expectancy relative to other high-income countries.
Mortality Differentials by Lifetime Earnings Decile: Implications for Evaluations of Proposed Social Security Law Changes
Under current law, the link between earnings and benefit levels and the equal application of age-of-entitlement rules, regardless of earnings levels, means that a worker is never penalized for additional work or thrift. This article finds that the Social Security–insured population does not fall neatly into a low-earnings poor health group and a remaining good health group. Attempts to target a subset of badly disadvantaged workers by altering the benefit rules that apply equally to everyone could both miss the intended target and introduce work disincentives into a program currently designed to reward work.
In the 2001 report of the President's Commission to Strengthen Social Security, the commission states that blacks "on average have both lower incomes and shorter life expectancies than other Americans." This paper examines the extent to which the shorter life expectancies of blacks are explained by differences between their average socioeconomic status and that of other Americans.
Estimates in this paper for men aged 25 to 64 show that about half of the difference in risk of death between blacks and all other races was explained by education level—the measure of socioeconomic status employed. At ages 65 to 90, black men were not found to have a significantly higher risk of death than men of all other races.
This project by RAND develops a microsimulation model of marriage, divorce, disability, and mortality based on SIPP data. It forms the demographic component of the MINT microsimulation model of the Social Security Administration.
Need for a National Health Program: Excerpts From Testimony Presented Before the Senate Committee on Education and Labor
The Net Effects of the Project NetWork Return-to-Work Case Management Experiment on Participant Earnings, Benefit Receipt, and Other Outcomes
This article summarizes the results of a major social experiment initiated by the Social Security Administration to test case management as a tool of promoting employment among persons with moderate to severe disabilities. This comprehensive analysis shows the benefits of using an experimental design to derive realistic net outcome estimates. While the results cannot be generalized to other case management interventions, they are nevertheless instructive for planning new initiatives.
This article focuses on a growing yet understudied subgroup of the elderly in the United States—the never-married. The first section, based on data from the Current Population Survey and a review of the academic literature, examines the current circumstances of never-married retirees, particularly their economic and health well-being. The succeeding section uses the Modeling Income in the Near Term (MINT) model to assess the projected (1) changes in the marital status composition of the future retirement-age population; (2) demographics of future never-married retirees, and (3) economic well-being of never-married retirees. The results highlight important links between marital trends, Social Security, and retirement outcomes and offer insight into some of the characteristics of current and future never-married retirees.
New Evidence on Earnings and Benefit Claims Following Changes in the Retirement Earnings Test in 2000
In April 2000, Congress enacted the Senior Citizens Freedom to Work Act of 2000, which removed the retirement earnings test for individuals at the full retirement age and older. This paper examines the labor force activity of workers aged 65–69 relative to older and younger workers in response to the removal of the earnings test. We use the 1 percent sample of Social Security administrative data that covers the period from 4 years before to 4 years following the removal of the test. Quantile regression methods allow us to identify the earnings levels of workers who change their work effort.
This article examines the recent reforms in individual account systems in Latin America, with a focus on the recent overhaul of the Chilean system and major reforms in Mexico, Peru, and Colombia. The authors analyze key elements of pension reform in the region relating to individual accounts: system coverage, fees, competition, investment, the impact of gender on benefits, financial education, voluntary savings, and payouts.
The economic well-being of subgroups of the population usually is measured by comparing resources and needs. The measure of resources often includes noncash income. Equivalence scales are used to adjust for differential needs. Little attention, however, has been paid to the desirability of consistency between the specifications of the resources and the equivalence scales in these comparisons. This exploratory paper suggests that a lack of consistency between the definitions used on the income and the needs sides can be important for the assessment of the economic well-being of subgroups when some types of noncash income are included in the definition of income. The measured economic status of the aged in the United States when Medicare noncash income is included in the definition of income is used as an example of this consistency problem. Some previous estimates have used equivalence scales that probably understated the relative needs of the aged by omitting needs associated with Medicare. The measured economic well-being of the aged relative to that of other age groups could be overestimated substantially as a result of this consistency problem. The basic problem is not confined to the treatment of Medicare or to the United States, but is much broader in nature.
The Supplemental Security Income (SSI) program, established by the Social Security Amendments of 1972 (Public Law 92-603), was designed to provide cash assistance to needy aged, blind, and disabled citizens, and noncitizens lawfully admitted for permanent residence or permanently residing under color of law. Since then, this means-tested program has undergone many legislative changes that affect the eligibility status of noncitizens. This article, presented in three parts, discusses the legislative history of noncitizen eligibility, and details relevant laws enacted since the program's inception; provides current data on the trends and changes of the noncitizen population; and describes the larger population of foreign-born SSI recipients, of which the noncitizens are a part. Data on the number of SSI recipients born abroad but who had become citizens before applying for SSI payments were not previously available. Analytical data are from the Supplemental Security Record (SSR) matched to the Social Security Number Identification (Numident) file.
A Note on Maximum Likelihood Estimation of Discrete Choice Models from the 1978 Survey of Disability and Work
This paper demonstrates an alternative maximum likelihood procedure for estimating discrete choice models in retrospective samples, such as a model of SSA disability beneficiaries or application status in the 1978 Survey of Disability and Work.
A Note on Sampling Variance Estimates for Social Security Program Participants From the Survey of Income and Program Participation
Most persons under the Old-Age, Survivors, and Disability Insurance (OASDI) program or the Supplemental Security Income (SSI) program receive the checks in their own name and make their own decisions as to the use of the funds. However, there has always been a portion of the beneficiary population who, for a variety of reasons, are not able to manage their benefits alone.
This note gives an overview of the representative payee program, including a program description and brief history, a "snapshot" of some characteristics of the population receiving Social Security benefits and SSI payments through a representative payee, recent trends in the number of persons with payees receiving such benefits or payments, and legislative and policy responses to these trends.
This paper explores the extent to which occupational experience is responsible for the adverse effect of low income and education on mortality. Using Current Population Survey data on education and disability matched to Social Security data on earnings, disability, and mortality, this question is pursued by examining how the estimated effects of income and education are affected once occupational experience is included in the mortality model. The inclusion of various occupational experience variables, as measured in the Dictionary of Occupational Titles and the National Occupational Hazards Survey, has virtually no effect on the estimated effects of income and education on mortality. These findings suggest that the high mortality of low-income and poorly educated persons is not due to characteristics of their employment but to other aspects associated with poverty.
Although the Social Security Administration actively encourages Supplemental Security Income (SSI) recipients to work, relatively little is known about how the occupations of those who do work compare with occupations of the nonrecipient population. This article uses the 2007 American Community Survey to estimate dissimilarity indices, which are used to compare the predicted and actual occupational distributions of working SSI recipients with the occupational distributions of the nonrecipient populations with and without disabilities. Although the actual occupational distributions are quite different between these groups, much of the difference can be explained by demographic characteristics, human capital, and disability type.
Old-Age and Survivors Insurance: Employment of Aged-Widow Beneficiaries Before Receipt of First Benefit
Old-Age Assistance Recipients: Reasons for Nonentitlement to Old-Age and Survivors Insurance Benefits
Old-Age, Survivors, and Disability Insurance: Characteristics of Beneficiaries Disabled Since Childhood, 1957–61
Old-Age, Survivors, and Disability Insurance: Early Problems and Operations of the Disability Provisions
Old-Age, Survivors, and Disability Insurance: Earnings of Older Workers and Retired-Workers Beneficiaries
Old-Age, Survivors, and Disability Insurance: Interagency Relationships in Disability Insurance and Vocational Rehabilitation
Older workers who receive short-term disability benefits to compensate them for medical conditions that limit their ability to work are three times more likely than younger workers to progress to permanent public disability benefits. This article documents the base rates of progression from short-term private to long-term private to permanent public disability benefits among older workers with various medical conditions.
Omnibus Reconciliation Act of 1981: Legislative History and Summary of OASDI and Medicare Provisions
In the recent economic literature on social security, much attention has been focused on its welfare implications (e.g., Samuelson ), and its impacts on individual retirement decisions (e.g., Boskin ), Sheshinski , Diamond and Mirrlees ) and capital accumulation (e.g., Feldstein , Munnell , and Kotlikoff ). In all these works, the level of social security is assumed to be exogenous although it is often determined in the real world by the desire of the majority of voters and thus is an endogenous variable of the economic system. While Browning  and Hu  did consider the determination of social security by a majority-voting process, they used the partial-equilibrium approaches in the sense that wages and the interest rate were assumed exogenous and independent of social security. The present paper constructs a simple three-period life-cycle model in which social security is determined by the majority-voting process, and the rate of interest by the demand for and supply of capital. In this framework, the tax rate voted by each person depends on the market rate of interest, which in turn is affected by the prevailing tax rate. It is assumed that social security is financed by a pay-as-you-go plan.
Outcome Variation in the Social Security Disability Insurance Program: The Role of Primary Diagnoses
This article investigates the role that primary impairments play in explaining heterogeneity in disability decisions. Using claimant-level data within a hierarchical framework, the author explores variation in outcomes along three dimensions: state of origin, adjudicative stage, and primary diagnosis. The findings indicate that the impairments account for a substantial portion of claimant-level variation in initial allowances. Furthermore, the author finds that the predictions of an initial and a final allowance are highly correlated when applicants are grouped by impairment. In other words, diagnoses that are more likely to result in an initial allowance also tend to be more likely to receive a final allowance.
This paper evaluates the out-of-sample performance of two stochastic models used to forecast age-specific mortality rates: (1) the model proposed by Lee and Carter (1992); and (2) a set of univariate autoregressions linked together by a common residual covariance matrix (Denton, Feavor, and Spencer 2005).
An Overview of American Indians and Alaska Natives in the Context of Social Security and Supplemental Security Income
The American Indian and Alaska Native (AIAN) population is understudied in a variety of policy contexts. This article compares AIAN socioeconomic characteristics with those of the total population, focusing on patterns of adult Social Security benefit and Supplemental Security Income receipt. The analysis takes advantage of the relatively large AIAN sample size provided by the 2005–2009 American Community Survey Public Use Microdata Sample.
During the first three decades of the Supplemental Security Income (SSI) program, the number of children receiving SSI because of a disability increased from 70,000 in 1974 to about 1 million at the end of 2005. With over 8,500 interviews completed between July 2001 and June 2002, the National Survey of SSI Children and Families (NSCF) is the first nationally representative survey since 1978 of noninstitutionalized children and young adults who were receiving SSI during the survey period or had formerly received SSI. The article discusses the objectives of the survey, its methodology and implementation, content of the questionnaire, a randomized response-incentive experiment, and related products including the release of a public-use data file.
The Railroad Retirement program was established in the 1930s. It provides retirement, survivor, unemployment, and sickness benefits to individuals who have spent a substantial portion of their career in railroad employment, as well as to these workers' families. This article describes the history, benefit structure, and funding of the Railroad Retirement program.
In recent years, a number of proposals have been advanced for privatizing all or part of the Social Security program in the United States. These proposals range from the immediate abolition to the gradual phasing-out of Social Security taxes and benefits. This paper evaluates several premises that often underlie privatization proposals—that rates of return in the private sector exceed those implicit in the Social Security program, that privatization would lead to an increase in national saving, and that privatization could somehow improve the lifetime welfare of all affected generations. The paper first considers whether rates of return in the private sector actually exceed those implicit in the Social Security program and discuss the conditions required for privatization to lead to an increase in national saving. The paper then demonstrates theoretically that an existing, well-managed, pay-as-you-go social security program is Pareto optimal in an economy with exogenous factor prices, regardless of the extent to which privately available rates of return exceed those implicit in the pay-as-you-go program; i.e., no privatization scheme can be found that benefits at least one present or future generation without harming at least one other generation, and no scheme can be found that allows the winners from privatization to compensate the losers and still come out ahead. The analysis is extended to incorporate the assumption of endogenous factor prices and the possibility that pay-as-you-go social security programs reduce private saving. The theoretical conclusions are illustrated by using a long-run economic projection model to simulate the aggregate economic and intergenerational redistributive effects of two stylized privatization schemes.
Participation in Programs Designed to Improve Employment Outcomes for Persons with Psychiatric Disabilities: Evidence from the New York WORKS Demonstration Project
This article examines a multistage recruitment process used to select Supplemental Security Income recipients with a psychiatric disorder to participate in a project designed to improve their employment outcomes. It uses an empirical method recently developed in the literature abut the Job Training Partnership Act (JTPA) to analyze the importance of individual characteristics on enrollment in the project. The results show that characteristics of SSI recipients have a different impact on enrollment at different points in the recruitment process. Results also point to ways that program administrators may improve recruitment strategies and participation for similar projects.
This article compares participation rates in three existing voluntary individual account-type plans—individual retirement accounts (IRAs), 401(k)s, and the federal Thrift Savings Plan (TSP)—in an effort to analyze who might participate in a voluntary individual account system.
Estimates of total benefits paid by employer sponsored pension plans seem to vary widely between different data sources and measures. Such discrepancies have been used to support differing conclusions about the effectiveness of the pension system. This article examines several measures of aggregate pension benefits in 1990, a year particularly rich in available data. Exploratory analysis suggests that the greatest source of discrepancy lies in differing treatments of lump-sum distributions, although the study also identifies several other types of payments that are variously, and erroneously, counted as pension income. Age of recipients is an important factor in analyzing different measures of aggregate pension benefits; discrepancies are much smaller among the aged than in the population as a whole, The analysis also provides new evidence about the unequal distribution of pension benefits among the aged, confirming from two data sources that benefits are heavily concentrated among higher income groups.
Pension Coverage Among Private Wage and Salary Workers: Preliminary Findings from the 1988 Survey of Employee Benefits
Pension coverage is declining in the United States, and most of the decline can be attributed to decreasing coverage among younger workers. In addition, it appears that the types of pension coverage are shifting, with a decline in traditional pension plans and an increase in 401(k) plans.
These are perhaps the most important findings from a 1988 survey of American workers, similar to pension surveys in 1972, 1979, and 1983. The 1988 survey collected data from a sample representing 114 million workers who were currently employed. This paper examines patterns of pension coverage among all private wage and salary workers, but focuses on those working full time.
Pension Coverage Among Private Wage and Salary Workers: Preliminary Findings From the 1988 Survey of Employee Benefits
Pension Coverage and Vesting Among Private Wage and Salary Workers, 1979: Preliminary Estimates from the 1979 Survey of Pension Plan Coverage
This paper examines pension coverage and vesting in 1979 among private wage and salary workers aged 14 and older in the employed labor force. Coverage and vested status are examined in relation to personal and current job characteristics in order to provide a profile of workers protected and not protected under the private retirement system. The data are derived from the 1979 Survey of Pension Plan Coverage, a supplement to the May 1979 Current Population Survey.
Three major findings emerge from the analysis. First, coverage rates among full-time workers increased slightly between 1972 and 1979, and vested rates increased substantially during the same period. Second, although coverage rates were moderate to high for certain groups of workers, many workers were not in these groups. Third, women were much less likely than men to be covered by a retirement plan and to have acquired vested rights to their benefits.
Many employer-provided pension plans explicitly account for Social Security in their benefit formulas—a practice known as integration. Because integrated pensions are directly linked to Social Security, both the incidence and design of explicitly integrated plans are likely to be affected by changes in the current Social Security program. While integration has been mentioned as an important issue in discussions of Social Security reform, researchers have largely ignored the concept of pension integration. This paper provides basic information about pension integration and addresses, in general terms, the relationship between Social Security reform and pension integration.
Many employer-provided pension plans explicitly account for Social Security in their benefit formulas—a practice known as integration. Because integrated pensions are directly linked to Social Security, both the incidence and design of explicitly integrated plans are likely to be affected by changes in the current Social Security program. While integration has been mentioned as an important issue in discussions of Social Security reform, researchers have largely ignored the concept of pension integration. This article provides basic information about pension integration and addresses, in general terms, the relationship between Social Security reform and pension integration.
This article presents descriptive statistics on pension participation and the types of plans among married couples, using data from the 1996 and 2008 Panels of the Survey of Income and Program Participation and Social Security administrative records. The findings indicate that in only 20 percent of couples, neither of the spouses participated in a pension plan; in about 10 percent of couples, the wife was the only one participating in a retirement plan; and in 37 percent of couples, the husband was the only one participating. Despite the substantial changes in pension landscape over the past decade, the findings reveal only modest changes in participation rates and in the types of plans respondents participated in between 1998 and 2009.
This article summarizes recent trends in employer sponsorship of retirement plans and employee participation in those plans. It is based on data collected in surveys of employers conducted by the U.S. Department of Labor's Bureau of Labor Statistics and surveys of households conducted by the U.S. Census Bureau.
Pension Status of Recently Retired Workers on Their Longest Job: Findings From the New Beneficiary Survey
This article examines the experience of Japan's social insurance permanent disability programs and compares its key features with the Social Security Disability Insurance program operating in the United States. It analyzes the determination and appeals processes in Japan for claiming permanent social insurance disability pensions. Trends in the number of Japanese disability program beneficiaries and benefit expenditures are also discussed.
Physically Demanding Occupations, Health, and Work After Retirement: Findings From the New Beneficiary Survey
There has been much discussion recently about life-cycle funds and their role in providing a secure retirement income for older Americans. These funds, which gradually shift account assets from broad-based stock funds to bond funds as a participant ages, are becoming an important vehicle for retirement savings. This policy brief explores the economic rationale behind the life-cycle approach and the advantages and limitations of life-cycle funds.
Poverty Among Single Elderly Women Under Different Systems of Old-Age Security: A Comparative Review
This study takes stock of available comparative research on the economic status of elderly single women in six industrialized countries: France, Germany, the Netherlands, Sweden, Switzerland, and the United States. A systematic comparison of income has become easier due to such standardized data bases as the Luxembourg Income Study.
But an explanation for different poverty rates among older women who are on their own requires a further, differentiated assessment of the countries' retirement benefit structures. This article attempts such a review. It makes use of a variety of single-country sources and takes into account the institutional heterogeneity of old-age security systems. The study concludes with a view of the effectiveness of different old-age security systems in preventing poverty among older single women.
Poverty-level Annuitization Requirements in Social Security Proposals Incorporating Personal Retirement Accounts
In the current discussions of Social Security reform, voluntary personal retirement accounts have been proposed. Recent research and debate have focused on several aspects of these accounts, including how such accounts would affect aggregate saving, system finances, and benefit levels. Little attention, however, has been paid to policies that would govern the distribution of account balances. This analysis considers such policies with respect to the annuitization of account balances at retirement using the Social Security Administration's Modeling Income in the New Term (MINT) model and a modified version of a recent legislative proposal to evaluate the effects of partial annuitization requirements.
This article looks at Supplemental Security Income (SSI) multirecipients. Using matched administrative and survey data, the author quantifies the prevalence of SSI recipients who live with other recipients (not including an SSI-eligible spouse). The author also conducts family- and household-level analyses to shed light on the social and economic characteristics of SSI multirecipients. The article reveals that SSI multirecipients represent about one-fifth of the SSI population and that their poverty rates vary according to family and household composition characteristics.
This summary is designed for those unfamiliar with the many current features of federally sponsored disability and health programs under the Social Security Act, including the Social Security Disability Insurance (DI) program, the Supplemental Security Income (SSI) program, Medicare, and Medicaid. It also provides an overview of the provisions and operations of the programs.
In 1981, Chile introduced a new approach to social insurance, a system of individual capitalization accounts financed solely by the employee. This new privatized system was an improvement over Chile's failing pay-as-you-go arrangement. As many countries worldwide are facing financial problems with their social security system, they are now looking to the Chilean model in trying to find solutions. This article describes the conditions that led to the new system, the transition, and details of the new privatized system.
A Profile of Children with Disabilities Receiving SSI: Highlights from the National Survey of SSI Children and Families
This article, based on interviews from the National Survey of SSI Children and Families conducted between July 2001 and June 2002, presents a profile of children under the age of 18 who were receiving support from the Supplemental Security Income program. The topics highlighted provide information of SSI children with disabilities and their families not available from administrative records, including demographic characteristics, income and assets, perceived health and disabilities, and health care utilization. While virtually every child in the SSI program is covered by some form of health insurance, primarily Medicaid, the data indicate substantial heterogeneity on other variables. This is true on many different dimensions, such as the perceived severity of the child's disabling conditions, health care utilization and service needs, the presence of other family members with disabilities, family demographics, and access to non-SSI sources of incomes.
A Profile of Social Security Child Beneficiaries and their Families: Sociodemographic and Economic Characteristics
This article presents the sociodemographic and economic characteristics of Social Security child beneficiaries. Using data from the Survey of Income and Program Participation matched with administrative benefit records, we find important differences in the incidence of child benefit receipt and average benefit amount across a number of individual and family-level characteristics. We also examine the demographic and income characteristics of the three beneficiary types: child of deceased worker, child of disabled worker, and child of retired worker.
Profile of Social Security Disabled Workers and Dependents Who Have a Connection to Workers' Compensation or Public Disability Benefits
This note provides a comprehensive profile of the characteristics of disability beneficiaries with a connection to workers' compensation or public disability benefits (PDBs). The 8.3 percent of disabled workers who have this connection tend to be economically better off, more frequently middle aged, male, afflicted with a musculoskeletal and connective tissue disorder, and tend to wait longer to apply for social security disability benefits after onset than the general disabled-worker population. In our analysis, we have included a special focus on California, as this state represents a large portion of the PDB workload, and its experience has a substantial effect on the national picture.
Using the Social Security Administration's MINT (Modeling Income in the Near Term) model, this paper analyzes the progressivity of the Old-Age, Survivors and Disability Insurance (OASDI) program for current and future retirees. It uses a progressivity index that provides a summary measure of the distribution of taxes and benefits on a lifetime basis. Results indicate that OASDI lies roughly halfway between a flat replacement rate and a flat dollar benefit for current retirees. Projections suggest that progressivity will remain relatively similar for future retirees. In addition, the paper estimates the effects of several policy changes on progressivity for future retirees.
In conjunction with larger Social Security solvency plans, many policymakers have proposed introducing benefit increases for older beneficiaries. This brief analyzes the projected effects of two such policy options on beneficiaries aged 85 or older in 2030 using the Modeling Income in the Near Term model. Both options target older beneficiaries' primary insurance amounts for a 5 percent increase, but they differ in how the increase would be calculated. Both proposals would increase monthly benefits for nearly all older beneficiaries, and both would reduce poverty levels among the aged, relative to currently scheduled benefits. However, the options differ in how the benefit increases would be distributed among older beneficiaries across shared lifetime earnings quintiles.
This paper asks whether information about immigrants other than their age, education, and years since migration can be productively used to project their earnings. Although many factors could affect immigrants' earnings, what is most useful for Social Security modeling purposes is relevant information that is readily available on a continuous basis. Country of origin is a good candidate as it is regularly and readily available from several administrative and survey data sources.
In this paper, microdata samples from the 1960–1990 censuses are used to examine the relationship between country of origin and the earnings of immigrants. By following cohorts of immigrants over 10-year intervals, we learn how country of origin affects the initial earnings of immigrants and how the relationship between country of origin and immigrants' earnings changes as immigrants live in the United States. The paper also presents theoretical insights and empirical evidence about the underlying causes of the link between country of origin and immigrants' earnings.
This article asks whether information about immigrants beyond their age, education, and years since migration can be productively used to project their earnings. Although many factors could affect immigrant earnings, what is most useful for Social Security modelling purposes is relevant information that is readily available on a continuous basis. Country of origin is a good candidate, as it is regularly and readily available from several administrative and survey data sources.
In this article, microdata samples from the 1960-90 censuses are used to examine the relationship between country of origin and the earnings of immigrants. By following cohorts of immigrants over 10-year intervals, we learn how country of origin affects the initial earnings of immigrants and how the relationship between country of origin and immigrant earnings changes as immigrants continue to live in the United States. The article also presents theoretical insights and empirical evidence about the underlying causes of the link between country of origin and immigrant earnings.
Projecting Retirement Income of Future Retirees with Panel Data: Results from the Modeling Income in the Near Term (MINT) Project
This article describes a model that projects the retirement income of Social Security beneficiaries from 1997 through 2031 using a number of panel data sources. With these data, we examine the composition of retirement income for future retirees in various birth cohorts, racial groups, marital states, and educational categories.
Accurate projections of lifetime earnings are useful in projecting Social Security benefits, trust fund balances, and economic resources of the elderly and the effects of changes in Social Security policy. This article projects lifetime Social Security earnings until retirement using data from the Survey of Income and Program Participation (SIPP) matched to Social Security records of annual earnings from 1951 through 1993.
We first develop, estimate, and test gender-specific multiple regression models of 10-year earnings intervals using the matched 1984 SIPP panel. We find strong relationships predicting the mean indexed monthly earnings level in the 10-year period of 1984-93. We then use the models to project (unobserved) Social Security earnings from 1994 through retirement for persons born between 1931 and 1955. By adding projected earnings to observed annual earnings to date, we forecast lifetime Social Security earnings for persons retiring early in the 21st century.
This article assesses the prospects for retirement security among Social Security beneficiaries in 2022 and 2062. In absolute terms, beneficiaries in 2062 will be better off than those in 2022, at least assuming Social Security benefits scheduled under current law. Relative measures of well-being, however, suggest a decline in well-being between 2022 and 2062. Projected improvements over time would lessen, and declines would be exacerbated, if Social Security benefits are reduced according to what is payable under current-law taxes.
Proposed Changes in Old-Age and Survivors Insurance: Report of the Advisory Council on Social Security to the Senate Finance Committee
This article explores how psychosocial variables relate to financial literacy. Although prior research has examined mainstay economic variables, this study examines whether previously unexplored variables—financial satisfaction, hopelessness, and religiosity—impact financial literacy. The study uses Health and Retirement Study data and finds that financial satisfaction and religiosity are associated with financial literacy.
The March 2000 pension reform in Japan focused on the long-term financial sustainability of the country's two-tiered public pension system. This article describes the prereform system, the reform process, the key changes stipulated by the reform, and the projected impact of the reform on future pension costs.
The authors use the Social Security Administration's Modeling Income in the Near Term (version 6) to describe the likely characteristics, work experience, Social Security benefit status, and economic well-being of future divorced women at age 70, by race and ethnicity. Factors associated with higher retirement incomes include having a college degree; having a strong history of labor force attachment; receiving Social Security benefits; and having pensions, retirement accounts, or assets, regardless of race and ethnicity. However, because divorced black and Hispanic women are less likely than divorced white women to have these attributes, income sources, or assets, their projected average retirement incomes are lower than those of divorced white women.
Analysis of the wealth held by white, black, and Hispanic households points to differences in saving behavior, notably a disinclination on the part of minority households to invest in riskier, higher-yielding financial assets. This finding may account for some of the great disparities in wealth across racial and ethnic groups that cannot be explained by income and demographic factors.
There are large differences in wealth across racial and ethnic groups, much of which remain unexplained even after controlling for income and demographic factors. This paper studies the issue of whether differences in saving behavior and rates of return on assets are a possible source of the differences in wealth. It uses data from the Health and Retirement Study to examine the differences in various components of aggregate wealth (including nonhousing equity, housing equity, financial assets, and risky assets) and to inspect differences in portfolio choices by race and ethnicity.
Descriptive tabulations of components of aggregate wealth and portfolio choices shown here point to differences between white and minority households in their saving behavior and choice of assets. These findings suggest that some of the large differences in wealth across racial and ethnic groups that remain unexplained even after controlling for income and demographic factors, may be attributable to the smaller participation in financial markets by minority households.
Financial illiteracy is prevalent in the United States, and low levels of financial literacy are associated with poor financial choices and negative economic outcomes. We examine previous work on the effect of financial education on household saving and find mixed results. Workplace financial education seminars positively affect household saving, but the size of this effect varies widely across studies. The effects of other financial education initiatives are less clear, highlighting the need for rigorous econometric evaluation of efforts to improve financial literacy.
In 1971, 44 percent of workers who had been currently entitled to social security disability insurance benefits (SSDI) for 1 year or more received benefits from at least one income source in addition to SSDI. These recipients of multiple benefits (RMB's) were found to have average benefits from SSDI which were greater than the average SSDI benefit for those who did not receive income from these additional sources. On the average, total benefits to RMB's were double the benefits paid to those who received only SSDI. The combined benefits for overlappers produced median replacement rates for nonoverlappers. The rate of receipt of replacement rates in excess of 80 percent of predisability earnings was 70 percent larger for persons who were RMB's than for those who were not.
Based on the present research, consideration of replacement rates based solely on SSDI benefits substantially understates the extent to which benefits from public and private programs actually replace predisability earnings. Since replacement rates based solely on SSDI benefits are generally higher for persons receiving only SSDI than for persons who receive multiple benefits, employing policies which cap replacement rates based only on SSDI benefits may only serve to increase the differential in the total replacement of predisability earning which exists between those who receive multiple benefits and those who do not. Increasing this differential could be considered undesirable from both the adequacy and equity viewpoints.
In this paper I use large, Social Security administrative data sets to examine changes in earnings distributions in the U.S. over the 1980s and early-1990s. Because the earnings information contained in these data sets comes directly from the W-2 forms filed by employers, the self-reporting errors and top-coding problems common in other data used for this type of analysis are minimized. Previous research has documented an increase in overall earnings inequality during the 1970s and the 1980s. While I too find that overall earnings inequality generally increased during the early- to mid-1980s, I find that this upward trend in earnings inequality might have slowed, or reversed, during the late-1980s and early 1990s. I also find that within-group inequality for various race and gender subgroups of the population generally increased over the period examined, confirming the results of others and extending those findings into the early 1900s. Finally, I find that women's earnings increased relative to men's earnings over the entire period and that the earnings of black males declined relative to the earnings of the other groups examined.
In this article, the author uses large, Social Security administrative data sets to examine changes in earnings distributions in the United States over the 1980s and early 1990s. Because the earnings information contained in these data sets comes directly from the W-2 forms filed by employers, self-reporting errors and top-coding problems, common in other data used for this type of analysis, are minimized. Previous research has documented an increase in overall earnings inequality during the 1970s and the 1980s. While the author also observes that overall earnings inequality generally increased during the early to mid-1980s, his analysis finds that this upward trend in earnings inequality might have slowed, or reversed, during the late 1980s and early 1990s. The data suggest that within-group inequality for various race and/or gender subgroups of the population generally increased over the period examined, confirming the results of others and extending those findings into the early 1990s. Finally, the author finds that female earnings increased relative to male earnings over the entire period, while the earnings of Black males declined relative to the earnings of the other groups examined.
In this article, the author uses large, Social Security administrative data sets to examine changes in earnings distributions in the United States over the 1980s through the mid-1990s. Because the earnings information contained in these data sets comes directly from the W-2 forms filed by employers, self-reporting errors and top-coding problems, common in other data used for this type of analysis, are minimized. Previous research has documented an increase in overall earnings inequality during the 1970s and the 1980s. The author finds that this upward trend in overall earnings inequality continues into the mid-1990s, despite a period of nearly constant or slightly decreasing earnings inequality from 1988 through 1992. The data also suggest that between-group earnings inequality, whether dividing the sample into groups by age group or by birth cohort, is increasing. Despite the increase in between-group earnings inequality over the period examined, however, within-group earnings inequality remains by far the largest contributor to overall earnings inequality.
In this paper, the author uses large Social Security administrative data sets to examine changes in earnings distributions in the United States over the 1980s through the mid-1990s. Because the earnings information contained in these data sets comes directly from the W-2 forms filed by employers, the self-reporting errors and top-coding problems common in other data used for this type of analysis are minimized. Previous research has documented an increase in overall earnings inequality during the 1970s and the 1980s. The author finds that this upward trend in overall earnings inequality continues in the mid-1990s, despite a period of nearly constant or slightly decreased earnings inequality from 1988 through 1992. The data also suggest that between-group earnings inequality, whether dividing the sample into groups by age group or by birth cohort, is increasing. Despite the increase in between-group earnings inequality over the period examined, however, within-group earnings inequality remains by far the largest contributor to overall earnings inequality.
Chile was the first country to replace its public pay-as you-go system with individual accounts. Since its inception in 1981, the new program has undergone a number of changes that offer workers more choices than they had before. This note describes those changes, which include an increase in the type and number of funds from which a worker may choose for an individual account, more incentives for making additional voluntary contributions, and the introduction of a separate mandatory individual account for unemployment benefits.
Workers' compensation pays for medical care immediately after injury and pays cash benefits for last work time after a 3- to 7-day waiting period. As a source of support for disabled workers, it is surpassed in size only be the Social Security Disability Insurance program. This article traces the development of workers' compensation coverage, benefits, and employer costs in 2004.
This article examines the Student Earned Income Exclusion (SEIE), which is part of the Supplemental Security Income (SSI) program. The SEIE is an incentive for work and education. The article presents statistics on the demographic characteristics of SSI recipients with SEIE; on the prevalence and intensity of SEIE use; on the seasonal patterns in SEIE use; and on the factors driving these seasonal patterns—including changes in earnings, student status, age, and SSI eligibility, as well as the effects of the annual SEIE limit.
Although the Social Security program has substantially reduced poverty among older Americans, 17.3 percent of nonmarried elderly women (widowed, divorced, or never married) are living in poverty today. This paper explores several policy options designed to reduce poverty by enhancing Social Security widow(er)'s benefits, Supplemental Security Income benefits, and Social Security's special minimum benefit. Depending on the option, 40 percent to 58 percent of the additional federal spending would be directed to the poor or near poor.
This paper attempts to make two contributions to this research. The first one is expositional. A simple overlapping generation's model is developed and used to reinvestigate the wealth and endowment redistribution effects from the introduction of pay-as-you-go social security. Our second contribution is substantive and extends the analysis of the endowment redistribution effect. Finally, perspective is offered on the relationship between pay-as-you-go social security and private saving.
Reflections on the Income Estimates from the Initial Panel of the Survey of Income and Program Participation (SIPP)
The Survey of Income and Program Participation (SIPP) represents a major effort on the part of the Federal statistical community to improve the quality and comprehensiveness of information on the economic resources of the household sector and to permit a more accurate portrayal of the impact of government tax and transfer programs on the economic status of the population.
This paper will not offer a comprehensive and definitive statement on the quality of SIPP income data. Neither the time nor resources available to the author, nor indeed, the state of SIPP data products, would permit making such a statement. However, enough information is available to offer a tentative interpretation of important aspects of the income data available from the first SIPP panel. Two broad themes will be touched upon. Since it is generally believed that the major technical defect of income surveys is the substantial tendency to underidentify the sources and amounts of income received by the population, the issue of the completeness of the SIPP money income estimates will be the central issue. A second important aspect of income data has to do with its suitability for analytic purposes.
Supplemental Security Income (SSI) statistics have been published in the Social Security Bulletin since the program began in 1974. For the most part, these statistics have been snapshots of current caseloads. Now, a new SSI longitudinal file permits a retrospective look at past program data. It also permits us to redefine key program indicators and to produce new distributions for these data. In this article, we take a look back in time at SSI applications, caseloads, and awards, and describe how these data were obtained from the SSI administrative computer files.
Relationship Between the Retirement, Disability, and Unemployment Insurance Programs: The U.S. Experience
Relationships of Home Relief to Private Employment and to Other Public Programs in New York City, 1940-42
In a federal government career that lasted more than four decades, Mollie Orshansky worked for the Children's Bureau, the Department of Agriculture, the Social Security Administration, and other agencies. While working at the Social Security Administration during the 1960s, she developed the poverty thresholds that became the federal government's official statistical measure of poverty; her thresholds remain a major feature of the architecture of American social policy and are widely known internationally.
Report of the Advisory Council on Social Security: The Status of the Social Security Program and Recommendations for Its Improvement
A Report to the President by the Interdepartmental Committee to Coordinate Health and Welfare Activities
This article reviews the research contributions of the Center for Retirement Research at Boston College over its 10-year history and their implications for Social Security and retirement income policy in three major areas: (1) Social Security's long-term financing shortfall, (2) the adequacy of retirement incomes, and (3) labor force participation at older ages as a means to improve retirement income security. The center has received substantial funding support from the Social Security Administration (SSA) in each area and has also successfully leveraged SSA's investment by attracting funding from other sources.
As the first in a trio of articles devoted to incorporating immigration into policy models, this article traces the history of research on immigrant earnings. It focuses on how earnings trajectories of immigrants differ from those of U.S. natives, vary across immigrant groups, and have changed over time. The highlighted findings underscore key lessons for modeling immigrant earnings and pave the way for representing the earnings trajectories of immigrants in policy models.
Using the New Beneficiary Data System, this article examines the reservation wages of a sample of Social Security Disability Insurance (DI) beneficiaries with work capabilities. It analyzes the magnitude of the reservation wages of DI beneficiaries compared to the last wage earned and to benefit amounts. In addition, the article discusses the determinants of reservation wages for DI beneficiaries.
Restoration of Certain Minimum Benefits and Other OASDI Program Changes: Legislative History and Summary of Provisions
Results of a 2001 Gallup poll indicate that the majority of users of the Social Security Administration's (SSA's) research, statistical, and policy products are satisfied with them and with the agency's performance in identifying and working on new and emerging areas of research and policy. Satisfaction varies with professional interests, length of time working with Social Security and Supplemental Security Income issues, work affiliation, and frequency of use of SSA's products.
Rethinking Disability Policy: The Role of Income, Health Care, Rehabilitation, and Related Services in Fostering Independence
This article analyzes the relationship between retirement and wealth. Using data from the first four waves of the longitudinal Health and Retirement Study—a cohort of individuals born from 1931 to 1941—we estimate reduced-form retirement and wealth equations. Our results show that those who retire earlier do not necessarily save more and that even if one's primary interest is in the relationship between Social Security policy and the decision to retire, it is important to incorporate saving behavior and other key decisions into the analysis.
This article examines the U.K. retirement income security system from the American perspective. It addresses issues that most concern U.S. analysts: how the United Kingdom has kept its future public pension costs at a manageable level, the extent to which privatization of public pensions has contributed to low pensions costs, the popular appeal of individual pension accounts, and the impact of privatization on retirement income. These issues are best understood in the context of the U.K. pension program's particular institutional structure and policies, two of which—"contracting out" of public pensions, and strong reliance on means-tested benefits—have been largely rejected in the evolution of U.S. policy to date.
Particular use is made of recently available data on coverage rates for public and private pension programs over the total working population and administrative records on inactive personal pension accounts.
This study examines the United Kingdom's retirement income security system from the American perspective. It addresses issues that most concern U.S. analysts: how the United Kingdom has kept its future public pension costs at a manageable level, the extent to which privatization of public pensions has contributed to these savings, the popular appeal of individual pension accounts, and the impact of privatization on retirement income. These issues are best understood in the context of the U.K. pension program's particular institutional structure and policies, two of which—"contracting out" of public pensions and strong reliance on means-tested benefits—have been largely rejected in the evolution of U.S. policy to date.
Particular use is made of recently available data on coverage rates for public and private pension programs over the total working population and administrative records on inactive personal pension accounts.
This study examines retirement outcomes in the first four waves of the 1992–1998 Health and Retirement Study (HRS). The article compares outcomes under alternative definitions of retirement, describes differences in outcomes among demographic groups, compares retirement dynamics based on self-reported retirement status, and compares retirement flows in the 1990s and the 1970s and between cohorts of the HRS. Among other findings, measured retirement is seen to differ, sometimes substantially, with the definition of retirement used among the various groups analyzed.
To project the retirement resources and well-being of divorced women, the authors use the Social Security Administration's Modeling Income in the Near Term (version 6). Findings show that Social Security benefits and retirement incomes are projected to increase for divorced women and that their poverty rates are projected to decline, due in large part to women's increasing lifetime earnings. However, not all divorced women will be equally well off; economic well-being in retirement varies by Social Security benefit type.
This paper examines the financial prospects of the baby boomers in their elderly years. The paper primarily attempts to draw together and summarize results found by other researchers, but a few new estimates are presented. The consensus of the research appears to be the following. Up to this point, the baby boom generation as a whole has a higher economic status than their parents' generation did at the same ages, but this does not hold for some subgroups. When it becomes elderly, the baby boom generation as a whole probably will have a higher economic status than their parents' generation has and will have at those ages, but, again, this may not hold for some subgroups. It is uncertain whether the baby boom generation as a whole will have enough resources in retirement to maintain their preretirement standard of living without increasing their saving or retiring later, but some subgroups will be able to maintain their living standard without changing their behavior.
In this article, the financial prospects of baby boomers in their elderly years are examined. The article primarily attempts to draw together and summarize results found by other researchers, but a few new estimates are presented. The consensus of the research appears to be the following. Up to this pint, the baby boom generation as a whole has a higher economic status that did their parents' generation at the same ages, but this does not hold for some subgroups. When it becomes elderly, the baby boom generation as a whole probably will have a higher economic status that their parents' generation has and will have at those ages, but, again, this may not hold for some subgroups. It is uncertain whether the baby boom generation as a whole will have enough resources in retirement to maintain their preretirement standard of living without increasing their saving or retiring later, but some subgroups will be able to maintain their living standard without changing their behavior.
This article provides an overview of the Retirement Research Consortium (RRC) from the Social Security Administration's perspective, including a brief history of the development of the RRC, a discussion of the aims of the RRC, and some thoughts on its future. The mission of the RRC is to plan and conduct a broad research program to develop Social Security and retirement policy information to assist policymakers, the public, and the media in understanding the issues. The RRC has been a remarkably successful extramural research venture that has advanced the knowledge base on Social Security and retirement issues, trained new scholars to become the next generation of Social Security and retirement policy experts, and provided objective, research-based input to the policymaking process.
This study examines the work history and economic circumstances of wives soon after receiving Social Security retirement benefits. Findings are based on a nationally representative sample of married women, aged 62 or over, who received their first benefit either as retired workers or as spouses of retired workers between mid-1980 and mid-1981.
This research note uses 2007 Survey of Consumer Finances (SCF) data to update work reported in an earlier article, "Retiring in Debt? Differences between the 1995 and 2004 Near-Retiree Cohorts." The analysis documents whether there have been changes in the debt holdings of near-retirees in 2007, a point in time reflecting the start of the recent financial and economic crisis, relative to 2004. Results show that near-retirees' debt levels in 2007 were modestly higher than in 2004, overall and across a number of subgroups. The results do not capture the full impact of the financial crisis, which manifested at the end of 2007 and in 2008.
This article uses the U.S. Federal Reserve Board's Survey of Consumer Finances to examine near retirees' (aged 50 to 61) debt holdings in 1995 and 2004. Employing a variety of measures on household borrowing, our results show that near retirees in 2004—the leading edge of the baby-boom cohort—had more consumer and housing debt than their counterparts in 1995. We observe a modest increase in the median debt service and debt-to-assets ratios between the two cohorts, but no statistical difference in their respective average. Analysis of several demographic and socioeconomic subgroups reveals certain population segments, such as single female households, with significantly higher debt service ratios in 2004.
Because of the imbalance between promised benefits and available taxes, some reform of Social Security is inevitable. At the same time, perceptions of Social Security are changing rapidly as it moves away from a system where all recipients—whether rich or poor—received more in benefits than they paid in taxes, and where those who were richer consistently received larger net transfers than those who were poorer. Reform is most likely to succeed if it returns to basic principles such as progressivity, equity, and efficiency.
Although these principles sometime conflict, they also provide much common ground. For example, if Social Security is meant to meet the greatest needs of the elderly, then increasing the retirement age (which mainly affects the younger and richer elderly) would be preferable to removal of the cost-of-living adjustment (which mainly affects the older and poorer elderly). Efficiency and equity principles, in turn, call attention to some groups—second earners in household, those with few employee tax preferences, those who work many years, and elderly workers—whose net benefits are lower than others who should have less claim to Social Security resources.
Return of Disabled-Worker Beneficiaries to the DI Program: Some Insights From the New Beneficiary Followup
Beneficiaries in the DI program may experience a recovery termination. What factors affect their reentitlement to DI benefits? Data from the New Beneficiary Followup was used to model return to the DI program. Those former beneficiaries who had vocational or job training and paid work after the recovery termination showed a lesser tendency to return to the DI program. Younger individuals and those in the highest primary insurance amount quartile also showed a lesser tendency to return.
A Review of State Legislation Relating to Medical Services and to Cash Payments for Disability, Proposed During 1939
This note discusses the net revenue estimates in the report "Paying People Not to Work: the Economic Cost of the Social Security Retirement Earnings Limit," by Aldona Robbins and Gary Robbins.
With the death of Robert Myers Ball at age 93 on January 29, 2008, the Social Security program lost one of its most committed supporters. In 2001, Ball's biographer, historian Edward D. Berkowitz, described Ball as "the major non-Congressional player in the history of Social Security in the period between 1950 and the present."
The Role of Behavioral Economics and Behavioral Decision Making in Americans' Retirement Savings Decisions
This article outlines findings from the judgment and decision making (JDM) and behavioral-economics literatures that highlight the many behavioral impediments to saving that individuals may encounter on their way to financial security. It discusses how behavioral and psychological issues, such as self-control, emotions, and choice architecture can help policymakers understand which factors, aside from purely economic ones, may affect individuals' savings behavior.
Sampling Technique for Obtaining Number of Covered Workers Under State Unemployment Compensation Laws
Sampling Variance Estimates for SSA Program Recipients From the 1990 Survey of Income and Program Participation
Security for America's Children: A Report from the Annual Conference of the National Academy of Social Insurance
Security for America's Children: A Report From the Annual Conference of the National Academy of Social Insurance (Part II)
The Social Security Disability Insurance program was established in 1956. This selected bibliography highlights the research and statistical work that the Social Security Administration (SSA) has done on the subject of disability. It focuses on articles that have appeared in the Social Security Bulletin since 1956 and earlier Bulletin articles about events leading up to the program's establishment. The bibliography also includes ORES Working Papers and disability-related research done by the Center for Retirement Research at Boston College and the Michigan Retirement Research Center at the University of Michigan funded through grants from SSA.
Selected Characteristics and Self-Perceived Performance of Individual Social Security and Supplemental Security Income Representative Payees
Social Security beneficiaries and Supplemental Security Income recipients who are unable to manage their own benefits may be assisted by relatives, friends, or other interested individuals, called representative payees. This note examines the characteristics of these payees, the payees' assessment of their own performance, and whether they believe their beneficiaries' needs are met. Using results of a survey of representative payees conducted by Westat, Inc. for a 2007 National Research Council report, this note also examines the importance of indicators of potential misuse identified in that report.
For the past few years, the Division of Disability Studies has been using simple random and stratified random sampling procedures for many of its studies. The beneficiary sample for the 1978 Survey of Disability and Work was a stratified random sample drawn from the Master Benefit Record. The samples used in the Study of Consistency and Validity of Initial Disability Decisions and the Trial Work Period Folder Study also used simple random sampling procedures. Simple random subsampling has been used to enable multivariate analysis to be performed on files that would otherwise have been too large for existing software.
Because of the Division of Disability Studies' wide use of simple and stratified random sampling designs, software was developed to efficiently accomplish these sampling schemes. This paper describes the algorithm and presents the computer programs that are currently being used in the division.
The Sensitivity of Proposed Social Security Benefit Formula Changes to Lifetime Earnings Definitions
Several Social Security proposals have included benefit formula changes that apply to earners above a specified percentage of the combined male and female (unisex) lifetime earnings distribution. This study finds that if Social Security's median unisex average indexed monthly earnings (AIME) amount is used to define an earnings threshold below which benefits will be held unreduced, the percentage of fully insured men subject to benefit reductions (70 percent) will exceed the unisex estimate of the population subject to benefit reductions (50 percent) by 20 percentage points. If policymakers wish to adjust future benefits and focus benefit reductions on middle or high primary or full-time wage earners in a household, the male, rather than unisex, AIME would come closer to achieving such a goal.
This article discusses the importance of 401(k)-type defined contribution plans and individual retirement accounts in providing retirement income for current and future retirees. The rising prevalence and importance of this type of income creates measurement errors in the Current Population Survey and other sources of data on the income of the aged because those sources substantially underreport the distributions from such retirement plans.
In recent years there has been a substantial amount of discussion about the economic status of the aged. There is a widely accepted view that the status of the aged has improved relative to the nonaged. This view has affected the debate on modifications to the Social Security system and other retirement plans. This paper discusses changes in the economic status of the aged during the past several years, in terms of the real income of the aged and in terms of the income of the aged relative to the income of the nonaged. The analysis uses detailed age groups within both the aged and nonaged groups. This detail is important because summary age groups are not homogeneous. Income change at different income levels within each age group is also examined. Income is adjusted for size of family unit and, in some cases, age of head.
Simplifying the Supplemental Security Income Program: Options for Eliminating the Counting of In-kind Support and Maintenance
The Supplemental Security Income (SSI) program's policies for both living arrangements and in-kind support and maintenance (ISM) are intended to direct program benefits toward persons with the least income and support, but they are considered cumbersome to administer and, in some cases, poorly targeted. Benefit restructuring would simplify the SSI program by replacing ISM-related benefit reductions with benefit reductions for recipients living with another adult. This article presents a microsimulation analysis of two benefit restructuring options, showing that the distributional outcomes under both options are inconsistent with a basic rationale of the SSI program.
Simulating Aggregate and Distributional Effects of Various Plans for Modifying the Retirement Earnings Test
Social Security's retirement test continues to receive considerable attention among policymakers. During the past several years a variety of proposals have been advanced that would modify or eliminate the test for persons aged 65–69. In January 1989, we completed a study report, prepared for SSA internal use, that examined several of these proposals, analyzing their effect on earnings, taxes, and benefits in the first year of implementation, assumed to be 1990. The analysis included both aggregate estimates and estimates for selected population subgroups.
Although the specific proposals for modifying the retirement test have changed somewhat during the past 2 years, continued congressional interest has prompted the release of this initial version of our research for public discussion. Because we are in the process of revising the report for final publication, readers are cautioned that numbers and interpretations contained in this paper are subject to change.
Simulating the Long-Run Aggregate Economic and Intergenerational Redistributive Effects of Social Security Policy
This paper reports on the status of a long-run simulation model of the U.S. economy and its relationships with the Social Security program that was designed with these considerations in mind. The model was developed specifically to analyze the potential equity and efficiency effects of alternative Social Security policies in a long-run context.
In the United States, low-income families who have a child or children with a disability may be eligible for cash benefits payable under the Supplemental Security Income (SSI) program. In the last few years, the number of these children on the SSI rolls has increased dramatically due, in large part, to new standards developed in response to a 1990 Supreme Court decision and the subsequent retroactive activity as a result of that decision. The rise in the number of child beneficiaries has led to increased concerns as to whether cash benefits are the best way to help these children and their families deal with the additional needs and expenses caused by disabilities. This article begins with a summary of recent American developments regarding the childhood disability issue as background to an exploration of comparative practices.
In light of the current interest in the United States concerning children with disabilities, it seems timely to explore the approaches used by other countries' social insurance programs. This study details the practices and provisions of 14 European countries and 4 other developed countries (Australia, Israel, Japan, and New Zealand). In addition to examining the variables involved in making cash benefits available and awarding them to families on behalf of disabled children, the article also provides information of in-kind benefits to which such families would be entitled and gives some insight as to the philosophy and policy goals of selected foreign programs.
The Social Security Administration's Death Master File: The Completeness of Death Reporting at Older Ages
To provide a more detailed assessment of the coverage of deaths of older adults in the Social Security Administration's Death Master File (DMF), this research note compares age-specific death counts from 1960 to 1997 in the DMF with official counts tabulated by the National Center for Health Statistics, the most authoritative source of death information for the U.S. population. Results suggest that for most years since 1973, 93 percent to 96 percent of deaths of individuals aged 65 or older were included in the DMF.
Statement by Social Security Commissioner Jo Anne B. Barnhart before the Subcommittee on Social Security, House Committee on Ways and Means, June 15, 2006.
The Social Security Administration (SSA) receives reports of earnings for the U.S. working population each year from employers and the Internal Revenue Service. The earnings information received is stored at SSA as the Master Earnings File (MEF) and is used to administer Social Security programs and to conduct research on the populations served by those programs. This article documents the history, content, limitations, complexities, and uses of the MEF (and data files derived from the MEF). It is intended for researchers who use earnings data to study work patterns and their implications, and for those interested in understanding the data used to administer the current-law programs.
Immigrant cohorts have varied over time in many ways that have important implications for projecting the contributions immigrants make to the Social Security system. Using immigrant cohorts in the 1970, 1980, and 1990 decennial censuses, we find that immigrant men experience faster earnings growth than native-born men and that there has been a large increase over time in immigrant earnings growth rates. Thus, recent reductions in immigrant entry earnings are significantly compensated for by faster immigrant earnings growth.
Immigrant cohorts have varied over time in many ways that have important implications for projecting the contributions immigrants make to the Social Security system. Using immigrant cohorts in the 1970, 1980, and 1990 decennial censuses, we find that immigrant men experience faster earnings growth than U.S.-born men; that there has been a large decline in initial immigrant earnings over time; and that there has been an accompanying large increase over time in immigrant earnings growth rates. Thus, recent reductions in immigrant entry earnings are significantly compensated for by faster immigrant earnings growth.
Using the Social Security Administration's MINT (Modeling Income in the Near Term) model, this paper calculates the marginal returns to work near retirement, as measured by the increase in benefits associated with an additional year of employment at the end of an individual's work life. With exceptions for certain population subgroups, the analysis finds that marginal returns on Social Security taxes paid near retirement are generally low. The paper also tests the effects on marginal returns of a variety of potential Social Security policy changes designed to improve incentives to work.
Many observers have noted that the long-term decline in labor force participation by older Americans may reflect the evolution of social institutions that effectively discourage work. Often-cited factors include employer discrimination against older workers, private pension plans that penalize continued employment, and the Social Security system. Various policies, such as eliminating Social Security's retirement test, have been proposed with a view to eliminating or lessening employment barriers.
This paper summarizes the economic evidence that addresses the role played by the Old-Age and Survivors Insurance (OASI) programs in retirement decisions. OASI is shown to have statistically significant effects on both the timing of retirement and the amount of post-retirement work; however, the influence is not large relative to the many other factors that determine the labor-supply decisions of older workers. Consequently, changes in Social Security policy of the type and magnitude that are politically feasible are unlikely to result in large changes in retirement behavior.
Social Security and Private Saving: A Reexamination of the Time Series Evidence Using Alternative Social Security Wealth Variables
In an important article in the Journal of Political Economy , Martin Feldstein estimated that the introduction of the social security system had reduced personal saving by 50 percent, with serious consequences for capital formation and output. His conclusion was based on a consumer expenditure function estimated with U.S. time series data and incorporating a social security wealth variable of his construction.
The original intent of this paper was to examine the sensitivity of Feldstein's conclusions to certain assumptions underlying his construction of the social security variable. In particular, we wanted to examine the implication of his assumptions concerning how individuals perceive future benefits and taxes.
In a recent article in the Journal of Political Economy (Leimer and Lesnoy 1982), we presented new time series evidence that cast considerable doubt on earlier evidence presented by Martin Feldstein (1974) which implied that social security had a large and statistically significant negative effect on personal saving in the United States. Our results may be summarized as follows: First, the social security wealth variable used by Feldstein was seriously flawed as a result of a computer-programming error. Simply correcting this error substantially changes the estimated effect of social security on saving. Second, the statistical evidence depends upon assumptions which are embedded in the construction of the social security wealth variable. These assumptions relate, first, to how individuals form their expectations about the social security benefits they expect to receive and the social security taxes they expect to pay and, second, to estimates of the number of workers, dependent wives, and surviving widows who will receive benefits. Adopting reasonable assumptions that differ from those used by Feldstein leads to generally weaker estimates of the relationship between social security and saving. Finally, the estimated relationship between social security and saving is acutely sensitive to the period of estimation examined. We concluded that the time series evidence simply does not support the hypothesis that social security has substantially reduced personal saving in the United States.
The purpose of this paper is to consider several alternative specifications of the consumer expenditure function.
Empirical evidence suggests that Social Security causes many individuals to retire earlier than otherwise. An important policy question is whether the program should be designed to lessen or eliminate this induced retirement effect. This paper proposes a framework for analyzing the socially desirable relationship between Social Security and retirement. Two common rationales for the program, forced saving and retirement insurance, are examined. If importance is attached to either of these rationales, then it is shown that retirement neutrality should probably not be a feature of Social Security.
Social Security and the "D" in OASDI: The History of a Federal Program Insuring Earners Against Disability
This article explores the efforts of Social Security planners to establish a disability program in the United States and the history of the program over the past 50 years. It describes how the program has evolved and the internal and external influences that have affected its development.
Each year the Social Security Administration forecasts the financial status of the Old-Age, Survivors, and Disability Insurance (OASDI) programs by projecting trends in key variables such as the labor force participation and earnings of the U.S. population. In the difficult task of projecting the long-term financial status of Social Security, assumptions are made concerning the relationship of immigrants to Social Security. An important aspect of that relationship is the emigration of immigrants.
This paper describes the general assumptions related to the level and timing of emigration that underlie projections of Social Security's financial status and examines how closely these assumptions fit research findings based on a variety of data sources. Previous trends in emigration and factors that may affect current and future levels of emigration are described. The paper also presents theoretical expectations and empirical evidence concerning the timing of emigration.
The purpose of this paper is to investigate the effect of the social security system on the labor supply of aged men using U.S. time series data for the period 1947 to 1975. The specific phenomena to be explained is the dramatic decrease in the labor supply of aged men during this period. Between 1947 and 1975, the annual labor force participation rate of men 65 and over decreased from 47.8 percent to 21.7 percent—a decrease of 55 percent. In terms of annual hours worked per capita for men 65 and over, there was a decrease from about 880 hours to 312 hours during this period—a decrease of 65 percent. The specific focus of the analysis will be on the relative importance of social security in explaining this decrease in labor supply.
This paper analyzes Social Security benefits as a retirement resource for near-retirees. It looks at how the average values of several measures of benefits such as Social Security wealth and earnings replacement rates have changed from earlier cohorts to today's near-retiree cohort, examines differences among demographic and socioeconomic groups within cohorts, and discusses reasons for these changes and differences. The paper uses greatly improved data (actual earnings histories) to produce more accurate measures of benefits; it also uses some new benefit measures. Key findings include the following: (1) average real Social Security wealth increases markedly for successive age cohorts, primarily because of increases in average real earnings; (2) replacement rates fall for recent cohorts, primarily because of the phase-in of increases in the age of eligibility for full benefits; and (3) median Social Security wealth is much higher for women than for men because women live longer.
Social Security as a Retirement Resource for Near-Retirees, by Race and Ethnicity, Nativity, Benefit Type, and Disability Status
This paper analyzes Social Security benefits as a retirement resource for selected subgroups of current and recent cohorts of near-retirees. The paper examines the distribution of benefits among (1) several race-ethnic subgroups, (2) the native-born and the foreign-born, (3) worker, spouse, and survivor beneficiaries, and (4) the disabled and the nondisabled. We use improved data (actual earnings history data) to produce more accurate measures of benefits. We look at how the average values of several benefit measures such as Social Security wealth and earnings replacement rates differ among the selected subgroups and discuss reasons for these differences. We find that substantial differences in earnings levels and/or mortality levels among these subgroups interact with Social Security program provisions to produce sizable differences in the values of our benefit measures.
The Windfall Elimination Provision (WEP) is a method of computing benefits for some workers who receive a pension based on non-Social Security covered work. At