How Would Joe Biden Reform Social Security and Supplemental Security Income?

How Would Joe Biden Reform Social Security and Supplemental Security Income?

By Karen E. Smith, Richard W. Johnson and Melissa M. Favreault of the Urban Institute

October 8, 2020

DOWNLOAD PDF

Abstract

Joe Biden has proposed increasing Social Security revenue, enhancing Social Security benefits, and expanding Supplemental Security Income, a program that provides cash benefits to low-income older adults and people with disabilities. Our projections show that his proposals would lift more than 1 million people out of poverty in 2021 and cut the poverty rate for adult Social Security beneficiaries over the coming decades by more than half. We project that by extending the Social Security payroll tax to earnings above $400,000, his plan would close about a quarter of the program’s long-term funding deficit and extend the life of the trust funds by about five years.

Read more!

Tomorrow! The Savings and Retirement Foundation, featuring Andrew Biggs

The Savings and Retirement Foundation

Join us Wednesday, 9 September

For a Zoom Talk by

Andrew Biggs

Senior Fellow at AEI

When he will speak about his new paper

How do Children Affect the Need to Save for Retirement?
Via Zoom

12:00 pm

RSVP

via

Zoom

Andrew G. Biggs is a resident scholar at the American Enterprise Institute, where he studies Social Security reform, state and local government pensions, and public sector pay and benefits. Biggs was previously the principal deputy commissioner of the Social Security Administration.

Read more!

Weaver: SSI awards for the disabled lowest in 20 years

My former SSA colleague David Weaver writes in The Hill that benefit awards for Supplemental Security Income (SSI), a means-tested benefit for the blind, disabled and aged, have dropped significantly during the Covid recession

In May, June, and July of this year, SSA awarded 5,038, 4,572, and 5,122 elderly individuals SSI benefits, respectively. The June award figure is the smallest number of monthly awards for the elderly in the last 20 years. The May and July figures are the second and third smallest in the last 20 years. Further, the total number of awards in these three months is 42 percent lower than the number of awards to the elderly for the comparable 3-month period in 2019.

You can check out his whole column here.

Read more!

New issue of the Journal of Pension Economics & Finance

Journal of Pension Economics & Finance
Volume 19 / Issue 3, July 2020
Published Online June 2020

Employment and substitution effects of raising the statutory retirement age in France
Simon Rabaté, Julie Rochut

Public pension wealth and household asset holdings: new evidence from Belgium
Mathieu Lefebvre, Sergio Perelman

Supporting decision-making in retirement planning: Do diagrams on Pension Benefit Statements help?
Féidhlim P. McGowan, Peter D. Lunn

On the effect of financial education on financial literacy: evidence from a sample of college students
Agar Brugiavini, Danilo Cavapozzi, Mario Padula, Yuri Pettinicchi

What determines financial literacy in Japan?
Yoshihiko Kadoya, Mostafa Saidur Rahim Khan

The implication of the hyperbolic discount model for the annuitisation decisions
Anran Chen, Steven Haberman, Stephen Thomas

Determinants of second pillar pension reforms: economic crisis and globalization
Joelle H. Fong, Markus Leibrecht

Systematic longevity risk: to bear or to insure?
Ling-Ni Boon, Marie Brière, Bas J. M. Werker

Policy Paper/Brief

Why are US men retiring later?
Wenliang Hou, Alicia Munnell, Geoffrey Todd Sanzenbacher, Yinji Li

Read more!

Brenton Smith: “Is the Social Security Trust Fund Real"?”

Writing for FedSmith: check it out here.

The Social Security Trust Fund has been around for 80 years. Over that time, its role within the program has changed, but the argument has remained the same. Is the Trust Fund real or simply an accounting ledger where wonks play with imaginary cash?

It has lingered for decades because there is no right or wrong answer to the question of whether the Trust Fund is real. It is a theoretical question where different assumptions lead to opposite conclusions.

Read more!

New paper from the NBER: “Social Security Wealth, Inequality, and Lifecycle Saving”

Social Security Wealth, Inequality, and Lifecycle Saving
John Sabelhaus and Alice Henriques Volz #27110
  
Abstract:

Wealth inequality in the US is high and rising, but Social Security is generally not considered in those wealth measures. Social Security Wealth (SSW) is the present value of future benefits that an individual will receive less the present value of future taxes they will pay. When an individual enters the labor force, they generally face a lifetime of taxes to pay before they will receive any benefits, and thus their initial SSW is generally low or negative. As an individual works and pays into the system their SSW grows and generally peaks somewhere around typical Social Security benefit claim ages. The accrual of SSW over the working life is most important for lower-income workers because the progressive Social Security benefit formula means that taxes paid while working are associated with proportionally higher benefits in retirement. We estimate SSW for individuals in the Survey of Consumer Finances (SCF) for 1995 through 2016 and use a pseudo-panel approach to empirically demonstrate those lifecycle patterns. We also show that including SSW in a comprehensive wealth measure generally reduces estimated levels of wealth inequality but does not reverse the upward trend in top wealth shares.

Read more!

Social Security’s Financial Outlook: The 2020 Update in Perspective

by Alicia H. Munnell, Center for Retirement Research at Boston College

IB#20-7

The brief’s key findings are:

• The 2020 Trustees Report, which was prepared before the pandemic, shows:
  • Social Security’s 75-year deficit increased from 2.78 percent to 3.21 percent of payroll.
  • Trust fund depletion remains at 2035, after which payroll taxes still cover about three quarters of promised benefits.
• This shortfall is manageable, and the pandemic is unlikely to fundamentally alter the long-term financial status of the program.
• Today’s crisis has also underscored the importance of Social Security, which continues to provide a steady source of income to millions of Americans.
• Therefore, once the crisis subsides, stabilizing Social Security’s long-term finances should be a high priority to ensure that Americans have full confidence in its future

DOWNLOAD FULL BRIEF

Read more!