Social Security Bulletin

This article describes the income replacement ratio as a measure of retirement income adequacy and identifies several issues analysts must consider when calculating a replacement ratio. The article presents the income replacement ratios experienced by participants in the original sample cohort of the Health and Retirement Study (HRS), who were born between 1931 and 1941. Replacement ratios are shown by the respondent's birth cohort, age when first classified as retired in the HRS, and preretirement income quartile...

This article explores the role of the Social Security Disability Insurance (DI) and Supplemental Security Income (SSI) cash benefit programs in providing access to public health insurance coverage among working-aged people with disabilities, using a sample of administrative records spanning 84 months. We find that complex longitudinal interactions between DI and SSI eligibility determine access to and timing of Medicare and Medicaid coverage. SSI plays an important role in providing a pathway to Medicaid coverage for many low-income individuals during the 29-month combined DI and Medicare waiting periods, when Medicare coverage is not available...

Workplace injuries and illnesses are an important cause of disability. State workers' compensation programs provide almost $60 billion per year in cash and medical-care benefits for those injuries and illnesses. Social Security Disability Insurance (DI) is the largest disability insurance program in the United States, with annual cash payments to disabled workers of $95 billion in 2008. Because injured workers may also receive DI benefits, it is important to understand how those two systems interact to provide benefits...

No abstract text is available yet for this article.

Analysts have proposed raising the maximum level of earnings subject to the Social Security payroll tax (the "tax max") to improve long-term Social Security Trust Fund solvency. This article investigates how raising the tax max leads to the "leakage" of portions of the additional revenue into higher benefit payments. Using Health and Retirement Study data matched to Social Security earnings records, we compare historical payroll tax payments and benefit amounts for Early Boomers (born 1948-1953) with tax and benefit simulations had they been subject to the tax max (adjusted for wage growth) faced by cohorts 12 and 24 years older...

This article highlights the prevalence and economic outcomes of financial illiteracy among American households, and reviews previous research that examines how improving financial literacy affects household saving. Analysis of the research literature suggests that previous financial literacy efforts have yielded mixed results. Evidence suggests that interventions provided for employees in the workplace have helped increase household saving, but estimates of the magnitude of the impact vary widely. For financial education initiatives targeted to other groups, the evidence is much more ambiguous, suggesting a need for more econometrically rigorous evaluations...

Social Security retirement benefits in the United States (US) reflect marital histories and lifetime earnings of current and former married couples. Focusing on the link between marital history and benefit eligibility, this article examines women's marital patterns over the past two decades. Using the 1990 and 2009 Marital History Modules to the Census Bureau's Survey of Income and Program Participation, descriptive/regression analysis reveals substantial changes in women's marital patterns among baby boomers and generation Xers...

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. The unisex distribution is an average of two disparate groups with large lifetime differences in labor market participation. 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 roughly unreduced, the percentage of fully insured men subject to benefit reductions (70 percent) exceeds the unisex estimate of the population subject to benefit reductions (50 percent) by 20 percentage points...

Long-term public disability programs in the United States and several other countries have incorporated fast-track (FT) procedures that share a common goal of accelerating applicants through various stages of the disability determination process--generally for those with severe disabilities, blindness, or terminal illness. This article identifies a variety of FT procedures either implemented or under consideration in public long-term disability programs operated in the United States and other countries; compares FT procedures in those disability programs with respect to specific program features, differences with respect to the administrative components involved in those procedures, and the level of technology used; examines more generally why countries may consider implementing FT procedures; and describes how FT procedures may be employed to improve overall processing of claims and contribute to disability case management...

The labor force participation rates of men and women aged 62-79 have notably increased since the mid-1990s. The result is a dramatic increase in the share of total money income attributable to earnings. For persons aged 65-69, the earnings share of total income increased from 28 percent in 1980 to 42 percent in 2009. For this age group in the late 1980s and early 1990s, 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...

This article examines how retirement income at age 67 is likely to change for baby boomers and persons born in generation X (GenX) compared with current retirees. We use the Social Security Administration's Modeling Income in the Near Term (MINT) model to project retirement income and assets, poverty rates, and replacement rates for current and future retirees at age 67. We find that, in absolute terms, retirement incomes offuture cohorts will increase over time, and poverty rates will fall. However, projected income gains are larger for higher than for lower socioeconomic groups, leading to increased income inequality among future retirees...

Blacks, Hispanics, and divorced women have historically experienced double-digit poverty rates in retirement, and divorce and other demographic trends will increase their representation in future retiree populations. For these reasons, we might expect an increase in the proportion of economically vulnerable divorced women in the future. This article uses 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...

For decades, policymakers have discussed how to remedy the high poverty rates of older widows. Yet older divorced women are more likely to be poor than older widows, and historical divorce and remarriage trends suggest that in the future a larger share of retired women will be divorced. This article uses the Social Security Administration's Modeling Income in the Near Term (version 6) to project the retirement resources and wellbeing of divorced women. We find 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...

Women's labor force participation and earnings dramatically increased after World War II. Those changes have important implications for women's Social Security benefits. This article uses the Social Security Administration's Modeling Income in the Near Term (version 6) to examine Social Security benefits for current and future beneficiary wives. The projections show that fewer wives in more recent birth cohorts will be eligible for auxiliary benefits as spouses because their earnings are too high. If their husbands die, however, most wives will still be eligible for survivor benefits because, despite the increase in their earnings over time, they still typically have lower earnings than their husbands...

Fewer Social Security Disability Insurance (DI) beneficiaries have their earnings suspended or terminated because of work than those who are actually working, partly because beneficiaries "park" earnings at a level below substantial gainful activity (SGA) to retain benefits. We assess the extent of parking by exploiting the 1999 change in the SGA earnings level from $500 to $700 monthly for nonblind beneficiaries using a difference-indifference analysis that compares two annual cohorts of beneficiaries who completed their trial work period, one that was affected by the SGA change and one that was not...

Recently, analysts in the United States (US) have proposed adopting caregiver credits, or pension credits, provided to individuals for time spent out of the workforce while caring for dependent children and sick or elderly relatives. The primary objective of these credits, used in almost all public pension systems in the European Union, is to improve the adequacy of old-age benefits for women whose gaps in workforce participation typically lead to fewer years of contributions, lower lifetime average earnings, and consequently lower pensions...

This article introduces the 2006 Earnings Public-Use File (EPUF) and provides important background information on the file's data fields. The EPUF contains selected demographic and earnings information for 4.3 million individuals drawn from a 1-percent sample of all Social Security numbers issued before January 2007. The data file provides aggregate earnings for 1937 to 1950 and annual earnings data for 1951 to 2006. The article focuses on four key items: (1) the Social Security Administration's experiences collecting earnings data over the years and their effect on the data fields included in EPUF; (2) the steps taken to "clean" the underlying administrative data and to minimize the risk of personal data disclosure; (3) the potential limitations of using EPUF data to estimate Social Security benefits for some individuals; and (4) frequency distributions and statistical tabulations of the data in the file, to provide a point of reference for EPUF users...

The majority of research on the retirement decision has focused on the health and wealth aspects of retirement. Such research concludes that people in better health and those enjoying a higher socioeconomic status tend to work longer than their less healthy and less wealthy counterparts. While financial and health concerns are a major part of the retirement decision, there are other issues that may affect the decision to retire that are unrelated to an individual's financial and health status. Judgment and decision-making and behavioral-economics research suggests that there may be a number of behavioral factors influencing the retirement decision...

We use data from Social Security administrative records to examine the lifetime patterns of initial entitlement to retired-worker and Disability Insurance (DI) benefits across cohorts born in different years. Breaking out age-at-entitlement patterns for different birth-year cohorts reveals close adherence in entitlement ages to changes in program rules, such as increasing the full retirement age. The proportion of a cohort that becomes newly entitled to DI benefits rises noticeably during recessions and at ages 50 and 55, and cumulative entitlement rate patterns show that more recent cohorts rely increasingly on DI benefits in their late 30s and 40s...

No abstract text is available yet for this article.