Archive for the ‘Social Security’ Category

Why Do SSI and SNAP Enrollments Rise in Good Economic Times and Bad?

February 25, 2015 Comments off

Why Do SSI and SNAP Enrollments Rise in Good Economic Times and Bad?
Source: Center for Retirement Research at Boston College

The number of participants in the Supplemental Security Income Program (SSI) and the Supplemental Nutrition Assistance Program (SNAP) skyrocketed during the Great Recession. But more surprising is that caseloads for both programs increased during the preceding expansion and during the nascent recovery period after the Great Recession. Using both administrative program data and the Survey of Income and Program Participation (SIPP), this project investigates the persistent growth in SSI and SNAP since 2000. Whereas the existing literature on program caseloads in the post-welfare reform era generally excludes the elderly from the analysis, this project is the first to investigate differences in elderly and non-elderly caseloads, allowing for differential responsiveness over time. Preliminary estimates suggest that the correlation between SSI and SNAP caseloads and economic well-being, and, separately, caseloads and health, grew stronger over this time. Coupled with a poverty rate that did not fall along with the unemployment rate, and with an increase in the share of the population reporting poor or fair health, these correlations helped lead to caseloads that remained roughly constant (SSI) or even increased (SNAP) during the most recent expansion, rather than falling as expected. The increases in caseloads stem both from increases in the entry rates among the newly eligible – particularly those in poor health – and from decreases in exit rates among low-income beneficiaries.

CRS — How Social Security Benefits Are Computed: In Brief (February 4, 2015)

February 20, 2015 Comments off

How Social Security Benefits Are Computed: In Brief (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

With about $900 billion in benefit outlays projected to be made in 2015, Social Security is the largest program in the federal budget. It provides monthly cash benefits to retired and disabled workers and their family members as well as to the family members of deceased workers. Currently, there are about 59 million beneficiaries. Under current law, Social Security’s revenues are projected to be insufficient to pay full scheduled benefits after 2033.

Monthly benefit amounts are determined by federal law. Social Security is an issue of ongoing interest both because of its role in supporting a large portion of the population and because of its long-term financial imbalance, and policy makers have considered numerous proposals to change its benefit computation rules.

The Social Security benefits that are paid to worker beneficiaries and to workers’ dependents and survivors are based on workers’ past earnings.

CBO — The Taxation of Social Security Benefits

February 18, 2015 Comments off

The Taxation of Social Security Benefits
Source: Congressional Budget Office

About 60 million people received Social Security benefits in 2014, CBO estimates. Up to 85 percent of a recipient’s benefits are subject to the individual income tax, depending on the recipient’s overall income. CBO estimates that income taxes on Social Security benefits totaled $51 billion in 2014, an amount that will be credited to the Social Security and Medicare trust funds after the tax returns for 2014 have been filed and analyzed. (CBO expects that those taxes will account for only about 4 percent of the tax revenues received by those trust funds, which receive the other 96 percent of their tax revenues from payroll taxes.)

About half of all Social Security beneficiaries owed some income tax on their benefits in 2014, CBO estimates. Of total Social Security benefits received last year, 6½ percent were owed in income taxes, with smaller percentages owed by many beneficiaries and much larger percentages owed by high-income beneficiaries. Because of legislation and changes in the economy, the share of benefits subject to tax has risen over the past several decades.

Like Social Security, defined benefit pensions typically augment retirees’ income by paying out specified benefits whose size is related to the retirees’ past earnings. However, the share of benefits that is taxed is generally smaller for Social Security than for defined benefit pensions. That difference is minimal for high-income taxpayers but large for low- and moderate-income taxpayers.
See also: Effect of Taxing Social Security Benefits by Income Class Estimated for Tax Year 2014

Lifetime Job Demands, Work Capacity at Older Ages, and Social Security Benefit Claiming Decisions

February 18, 2015 Comments off

Lifetime Job Demands, Work Capacity at Older Ages, and Social Security Benefit Claiming Decisions
Source: Center for Retirement Research at Boston College

We use Health and Retirement Study data linked to the Department of Labor’s O*Net classification system to examine the relationship between lifetime exposure to occupational demands and retirement behavior. We consistently found that both non-routine cognitive analytic and non-routine physical demands were associated with worse health, earlier labor force exit, and increased use of Social Security Disability Insurance. The growing share of workers in jobs with high levels of cognitive demand may contribute to growth in DI use.

Are Retirees Falling Short? Reconciling the Conflicting Evidence

February 16, 2015 Comments off

Are Retirees Falling Short? Reconciling the Conflicting Evidence
Center for Retirement Research at Boston College

This paper examines conflicting assessments of whether people will have adequate retirement income to maintain their pre-retirement standard of living. The studies that it examines use data from the Survey of Consumer Finances (SCF), the Health and Retirement Study (HRS), and the HRS supplement Consumption and Activities Mail Survey (CAMS). Critical components of the analysis are behavioral assumptions about household consumption patterns when children leave home and when households retire. A key limitation is that the behavioral assumptions in the different studies are based on incomplete knowledge of actual household behavior.

The paper found that:

  • A simple – assumption-free – calculation of wealth to income by age clearly indicates that households retiring in the future will be less prepared than those in the past.
  • Studies showing that households are saving optimally hinge crucially on assumptions that people are willing to accept declining consumption as they age and that they sharply reduce their consumption when the children leave home.
  • While other studies have found consumption does not decline early in retirement, new analysis suggests that many will be unable to maintain this pace over their full retirement.

The policy implications of the findings are:

  • Households are more likely than not to be falling short in their retirement preparedness.
  • Such shortfalls should be taken into consideration as policymakers discuss options for reforming Social Security.
  • To bolster retirement preparedness, policymakers may want to consider ways to encourage more private saving, such as requiring 401(k)s to adopt auto-enrollment and auto-escalation policies and to apply these policies to current workers as well as new hires.

Seesaws and Social Security Benefits Indexing

January 29, 2015 Comments off

Seesaws and Social Security Benefits Indexing
Source: Harvard Business School Working Papers

The price indexation of Social Security benefit payments has emerged in recent years as a flashpoint of debate in the United States. I characterize the direct effects that changes in that price index would have on retirees who differ in their initial wealth at retirement and mortality rates after retirement. I propose a simple but flexible theoretical framework that converts benefits reform first into changes to retirees’ consumption paths and then into a net effect on social welfare. I calibrate that framework using recently produced data on Social Security beneficiaries by lifetime income decile and both existing and new survey evidence on the normative priorities Americans have for Social Security. The results suggest that the value retirees place on protection against longevity risk is an important caveat to the widespread enthusiasm for a switch to a slower-growing price index such as the chained CPI-U.

Geographic Pattern of Disability Receipt Largely Reflects Economic and Demographic Factors; Disability Benefits Especially Important in South and Appalachia

January 13, 2015 Comments off

Geographic Pattern of Disability Receipt Largely Reflects Economic and Demographic Factors ; Disability Benefits Especially Important in South and Appalachia
Source: Center on Budget and Policy Priorities

About 6 percent of the nation’s working-age population receives disability payments from Social Security Disability Insurance (DI) or Supplemental Security Income (SSI), and people who depend on those benefits live in every state, county, and congressional district. Nevertheless, there’s a distinct “geography of disability.” Some states, chiefly in the South and Appalachia, have much higher rates of receipt — nearly twice the national average.[2] In contrast, states along the Washington-to-Boston corridor (where many policymakers and opinion leaders live), on the West Coast, and in the Great Plains and Mountain West have relatively few disability beneficiaries.

While some critics see this disparity as evidence of problems with the programs, it mostly reflects a few key demographic and economic factors. In a nutshell, states with high rates of disability receipt tend to have populations that are less educated, older, and more blue-collar than other states; they also have fewer immigrants. (See Table 1 for state-by-state data.) In fact, those four factors alone are associated with about 85 percent of the variation in disability receipt rates across states.[3] Furthermore, those factors are directly or indirectly related to the programs’ eligibility criteria.


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