Thursday, August 29, 2019

Social Security Bulletin, Vol. 79, No. 3

Released August 2019.

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The Social Security Windfall Elimination Provision: Issues and Replacement Alternatives

by Glenn R. Springstead

The Windfall Elimination Provision (WEP) reduces the Social Security benefits of individuals who would otherwise receive a full benefit based on earnings in Social Security–covered employment as well as pension income from noncovered employment. Since the WEP was established in 1983, critics have asserted that it overcorrects the would-be windfall for affected beneficiaries and is difficult to administer. This article considers two WEP replacement options that would modify the benefit calculation methodology. It compares the current WEP with the two options and discusses some of the possible effects of changing the current law.

Social Security Disability Insurance and Supplemental Security Income Beneficiaries with Multiple Impairments

by Elisa Walker and Emily Roessel

This article uses data from the Social Security Administration's National Beneficiary Survey and agency administrative records to estimate the number and examine the characteristics of adult disability-program beneficiaries with multiple impairments. In the survey, most beneficiaries report conditions in more than one impairment category. Beneficiaries with multiple impairments tend to have more activity limitations and poorer health than those reporting one impairment. They also tend to be older and to have higher household incomes than those with one impairment, and are less likely to have work-related goals and expectations. Administrative data contain fewer impairments per beneficiary and do not necessarily reflect the condition(s)that the beneficiary considers most limiting. Administrative data are complete for their purpose, but they may underrepresent the totality of disability that beneficiaries experience, and thus may be less predictive of employment and other outcomes than survey data.

The Time Between Disability Onset and Application for Benefits: How Variation among Disabled Workers May Inform Early Intervention Policies

by Matt Messel and Alexander Strand

This article examines how much time typically passes between disability onset and application for disability-program benefits, by age at onset and diagnosis. Among eventual applicants, certain subgroups might be suitable targets for employment-support interventions. Using Social Security administrative data, the authors find that the median period from onset to application is 7.6 months. Younger applicants tend to have waited longer, particularly those diagnosed with back impairments or arthritis. Among both younger and older applicants, individuals diagnosed with intellectual disability or other mental disorders are potential targets for early intervention programs because those groups wait the longest to apply and are the most likely to continue working in the interim.

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Tuesday, August 27, 2019

New paper: “The Effects of Differential Income Replacement and Mortality on U.S. Social Security Redistribution”

The Effects of Differential Income Replacement and Mortality on U.S. Social Security Redistribution

By Li Tan and Cory Koedel

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PDF icon WP 17-01

WORKING PAPER NUMBER:

ABSTRACT:

We study redistribution via the United States Social Security retirement system for cohorts of men born during the second half of the 20th century. Our focus is on redistribution across race and education groups. The cohorts we study are younger than cohorts studied in previous, similar research and thus more exposed to recent increases in earnings inequality. All else equal, this should increase the degree of progressivity of Social Security redistribution due to the structure of the benefit formula. However, we find that redistribution is only modestly progressive for individuals born as late as 1980. Differential mortality rates across race and education groups are the primary explanation. While black-white mortality gaps have narrowed some in recent years, they remain large and dull progressivity. Mortality gaps by education level are also large and unlike the gaps by race, they are widening, which puts additional regressive pressure on Social Security redistribution.

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New paper from the NBER: “Using Vignettes to Improve Understanding of Social Security and Annuities”

Using Vignettes to Improve Understanding of Social Security and Annuities

By Anya Samek, Arie Kapteyn, and Andre Gray #26176

Abstract:
Evidence shows that people have difficulty understanding complex aspects of retirement planning, which leads them to under-utilize annuities and claim Social Security benefits earlier than is optimal. To target this problem, we developed vignettes about the consequences of different annuitization and claiming decisions. We evaluated our vignettes using an experiment with a representative online panel of nearly 2,000 Americans. In our experiment, respondents were either assigned to a control group with no vignette, to a written vignette, or to a video vignette. They were then asked to give advice to hypothetical persons on annuitization or Social Security claiming, and were asked factual questions about these concepts. We found evidence that being exposed to vignettes led respondents to give better advice. For example, the gap between advised claim age for a relatively healthy person versus a relatively sick person was larger by nearly a year in the vignette treatments versus! the control group. Further, the vignettes increased financial literacy related to these concepts by 10-15 percentage points. Interestingly, the mode of communication did not have a significant impact – the video and written vignettes were equally effective.

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