Social Security and Elderly Poverty

November 22nd, 2013 at 7:55 am

I very much appreciate Paul K, Sens Harkin and Warren, and others who are putting an expansion of Social Security on the table.  Relative to fighting about cuts to the stalwart retirement program, that’s called “playing offense,” and given that Social Security is the most solid leg of the three-legged retirement stool (Soc Sec, pensions, savings), strengthening the program makes a lot of sense.

But I wanted to elaborate one point from Paul’s oped this AM.  He points out that one argument against expanding benefits is that the elderly poverty rate in already relative low, at about 9%.  But his argument here is that measured correctly, the elderly poverty rate is actually about 15%, and as pensions continue to deteriorate, it will go higher.

But IMHO, the best argument here is in the figure below.  Social Security itself is the reason the official elderly poverty rate is 9%; absent those benefits, the rate would be 44%!

So, whether we’re talking about expanding the program for those who need it the most, or preserving it against those who would whack at it through benefit cuts or privatization, keep this figure in mind.  In an era when people are questioning whether the government can run large, effective, efficient social insurance programs, Social Security stands out as an extremely strong affirmative answer.

soc_sec_12

Source: Ruffing, CBPP

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6 comments in reply to "Social Security and Elderly Poverty"

  1. Amit says:

    Excellent point Jared – something no one else picked up on until now and the most powerful argument for expanding Social Security.

    Perhaps another chart might add more clarity to the story of Social Security being the prime component of retirement income now – one that shows the same percentage of seniors who would have been in poverty without Social Security, increasing over the years.


    • Jared Bernstein says:

      Good idea!


    • PJR says:

      Agree with the comment and suggestion and would add a suggestion that we see similar bar charts for projected poverty rates with and without Social Security’s currently scheduled benefits. Various recommendations to reduce benefit levels would produce results somewhere between the “with” and “without” bars, so I’d like to know what these bars look like.


  2. Tom in MN says:

    Also Krugman and Summer’s latest discussion about secular stagnation makes cuts to SS and Medicare wrong from an economic stimulus view point as well. And as we are saving money on health care with the ACA, to not spend this would also be a mistake, thus a good use for these savings would be to expand SS.


  3. purple says:

    We’re going backward on Social Security. I personally don’t want a lot of 70 year old truckers on the road. Just because people are living a bit longer does not mean they are capable of working at most jobs at a high level. Frankly, there are too many 70 year olds in Congress. It doesn’t matter how active you are, the mind starts to go at a certain point.


  4. Fred Donaldson says:

    Retirement might give some smart persons time to think about their government and how to improve it by removing certain elements that decry the public and extoll the private. For that reason Social Security is the enemy of the greedy and powerful. Keep the smart ones working two jobs and they might never form another political party, support a union or write a book like Baker or Bernstein.


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