In 1998, the Social Security Administration established the Retirement Research Consortium to encourage research on topics related to Social Security and the well-being of older Americans, and to foster communication between the academic and policy communities. The Michigan Retirement Research Center (MRRC) participated in the Consortium from its inception until 2019, when the MRRC expanded and became the Michigan Retirement and Disability Research Center. This article surveys a selection of the MRRC’s output over its second 10 years (2008–2017), summarizes its innovative use of new data sources, and highlights several key themes in the center’s research contributions.
Although Hispanics rely more on Social Security benefits for retirement income than other population groups, their knowledge about the programs is shallower. The authors of this article use data from a large Internet survey panel to identify gaps in Social Security knowledge between Hispanics and non-Hispanic whites and among Hispanics across ancestry and primary-language groups and test the statistical significance of their findings. The results offer insights for further research and guidance for policy that aims to promote retirement security for U.S. Hispanics.
There is wide geographic variation in Social Security Disability Insurance (DI) and Supplementary Security Income (SSI) participation across the United States. The authors describe the variation. Using data from Social Security Administration reports and results from the Census Bureau’s American Community Survey, the authors decompose the geographic variation in program participation into component parts including variation in disability prevalence and variation in program participation among working-age persons with disabilities. The variation in participation among persons with disabilities is further decomposed into socioeconomic subcomponents.
Social Security benefits comprise the most important source of income for people aged 65 and over. However, changes in the last decades in employer-provided pensions, Social Security program, and societal changes may have altered the composition of income sources among the elderly. Some researchers have argued that the Current Population Survey (CPS ASEC) doesn’t properly measure income from retirement accounts and thus overestimate importance of Social Security and underestimate reliance on income from pensions. Given changes to the CPS, we focus on reliance on Social Security benefits among the elderly, using data from the 2015 CPS, and validate the CPS estimates with those from the Survey of Income and Program Participation and the Health and Retirement Study. Despite differences across the three surveys, estimates are quite similar regarding the share of income from Social Security. Findings suggest that about half of elderly receive at least 50% of their family income from Social Security benefits, whereas for a quarter of elderly Social Security benefits comprise at least 90% of their family income.
People with intellectual disability (ID) make up about 14 percent of all working-age Supplemental Security Income and Social Security Disability Insurance (DI) beneficiaries. Because of their disabilities, many face major employment challenges and often receive federal disability program benefits for several decades. This article describes these beneficiaries and compares them to those without ID. The two groups differ markedly in a number of ways; for example, those with ID are more likely to be working, but they also earn significantly less than other disability program beneficiaries. Their relatively low earnings, combined with low benefits, contribute to a higher overall rate of poverty--particularly among those who receive only DI. Introduction Intellectual disability (ID) is relatively uncommon; studies have estimated that less than 5 percent of the general population has ID (McKenzie and others 2016; Maulik and others 2011). Although the prevalence of ID is rare in the general population, people with ID make up a sizable share (about 14 percent) of the 13 million working-age Supplemental Security Income (SSI) and Social Security Disability Insurance (DI) beneficiaries. (1) ID is especially common among SSI recipients--more than one-fifth of them are eligible for payments because of ID. ID is typically diagnosed during childhood. As a result, many beneficiaries with ID enter the SSI or DI programs at a young age and receive benefits for decades. Children with ID make up about 9 percent of children enrolled in SSI (SSA 2015b), and the large majority of them (about 80 percent) continue to qualify for SSI payments after age 18 (Hemmeter and Gilby 2009). Riley and Rupp (2015) estimated that beneficiaries with ID remain in the disability programs as working-age adults for an average of 29 years--about twice the average for all disability program beneficiaries. This long tenure contributes to much higher average DI, SSI, Medicare, and Medicaid cumulative expenditures than the estimated average for all beneficiaries ($472,913 versus $292,401, in 2012 dollars) (Riley and Rupp 2015). Given their large number and long tenure on the disability rolls, beneficiaries with ID represent a potentially important target group for support services designed to enable community living, permit long-term employment, and reduce reliance on public benefits. Effective supports could also affect federal and state initiatives designed to promote employment opportunities for people with ID and developmental disabilities (DDs) in competitive, community-based employment, rather than in sheltered employment settings, where they earn low wages and remain segregated from mainstream society. Information on the characteristics and employment experiences of people with ID is limited because identifying people with ID in national surveys can be difficult (Emerson, Felce, and Stancliffe 2013; Hendershot and others 2005). In addition, the relatively low prevalence of ID in the general population makes it difficult to study a large sample. Most of the information about people with ID comes from administrative sources (such as state education, vocational rehabilitation, and DD agencies) and from special surveys (such as those conducted for the National Longitudinal Transition Study and the National Core Indicators [NCI] project, which use administrative data to identify individuals with ID). Our study adds to the existing information by profiling working-age adults with ID who receive SSI and DI benefits. We use data from several rounds of a large, nationally representative survey of SSI and DI beneficiaries to describe the personal characteristics, employment, and income sources of beneficiaries with ID, and we compare them with those of disability program beneficiaries with other impairments. Our findings provide a better understanding of the working-age population with ID that relies on federal disability program benefits, the employment challenges they face, and the differences in their employment experiences from SSI and DI beneficiaries with other significant disabilities. …
In addition to providing income-maintenance payments to eligible participants, the Supplemental Security Income (SSI) program provides automatic Medicaid enrollment for applicants upon SSI award in most states. Other states require applicants to file a separate Medicaid application. Some use the SSI eligibility criteria for both programs; others use Medicaid eligibility rules that are more restrictive. The authors use matched monthly longitudinal administrative records to test whether automatic enrollment has a positive effect on Medicaid coverage. Using logistic regression with a combination of repeated cross-section and regression discontinuity approaches, they find positive effects of automatic enrollment on Medicaid coverage relative to other policies. The differences are attributable to a discontinuous increase in Medicaid coverage shortly after the final disability determination decision. The time lag arising from the often-lengthy disability determination process reduces the effectiveness of automatic enrollment, which depends critically on timeliness of the final award decision.
A number of studies have used estimates of historical and projected lifetime net transfers (benefits less taxes) by birth cohort under the Old-Age and Survivors Insurance program to calculate and compare the aggregate present-value sum of such transfers for selected birth-cohort groups. Those calculations indicate that, from a program accounting perspective, the earliest generations of program participants received large transfers from later generations of participants. Some recent studies have referred to this cumulative transfer to the earliest generations as a “legacy debt” and characterized it as a burden borne by the later generations. This article clarifies the legacy debt concept and discusses the conditions required for a legacy debt to exist in a meaningful economic sense.
Introduction The Social Security Act of 1935 provided for the general welfare of workers by establishing a system of federal old-age benefits. The 1939 amendments to the act added auxiliary benefits for women based on what was viewed as the traditional American family--men were breadwinners; women were wives (or widows); and husbands and wives remained married for a lifetime (Berkowitz 2002). Subsequent amendments extended benefits to divorced wives and survivors of insured workers. (1) Today, Social Security provides monthly retirement-age benefits to qualified workers and auxiliary benefits to their wives, ex-wives, and widows based on their marital histories and lifetime earnings (Social Security Administration [SSA], n.d.). (2) Increasing numbers of women now receive Social Security retirement benefits based on their own earnings. Many women, however, continue to receive benefits based partly or entirely on the earnings records of their current or former husbands because their marriage-based benefits are higher than they would be if they were based solely on their own earnings records. Because benefit amounts are higher than they otherwise would be for a substantial number of beneficiaries, marriage-based auxiliary benefits have an important effect on program costs. In December 2014, Social Security paid retirement-age benefits to 26.3 million women aged 62 or older (SSA 2016, Table 5A.14). Slightly more than half of those beneficiaries (51.1 percent, or 13.4 million women) received benefits based on their own earnings, while the remainder (48.9 percent, or 12.9 million women) received benefits based at least in part on marriage. (3) In December 2014, about 2.3 million women aged 62 or older received auxiliary benefits based solely on their spouses' earnings and another 3.1 million were dually entitled to both their own retired-worker benefits and auxiliary benefits. In addition, 3.7 million widows received higher monthly Social Security benefits based on their deceased spouses' earnings records and 3.8 million dually entitled widows received a survivor benefit that was higher than their own retired-worker benefit would have been. Thus, about 23 percent of female beneficiaries aged 62 or older received only wife/widow benefits and another 26 percent received dual-entitlement benefits in December 2014. That is a marked shift from earlier years, such as 1960, when 57 percent of female beneficiaries aged 62 or older received only auxiliary benefits and 5 percent received dual-entitlement benefits. Two major trends have contributed to the shift from auxiliary to retired-worker benefits for women at retirement. First, women's participation in the labor force increased dramatically after 1960 (Goldin 2006; Blau and Kahn 2007). This was particularly true for married women (Bureau of Labor Statistics 2014), including mothers of young children (Cohany and Sok 2007, Chart 1). The majority of this increase occurred by the 1990s, resulting in more women in post-World War II birth cohorts earning eligibility for Social Security retirement benefits based on their own lifetime earnings. Second, marriage trends began to change in ways that resulted in lower percentages of women born after 1945 becoming eligible for benefits as wives or widows of eligible workers (Stevenson and Wolfers 2007; Kennedy and Ruggles 2014; Tamborini and Whitman 2007; Iams and Tamborini 2012; Butrica and Smith 2012). Social Security Program Rules This section provides a brief overview of the Social Security program rules applicable to women aged 62 or older who are eligible for marriage-based retirement benefits as the wife, divorced ex-wife, or widow of an insured worker. The wife of a retired worker is eligible for a spousal benefit of up to 50 percent of her husband's primary insurance amount (PIA), if claimed at her full retirement age (FRA). (4) A wife generally must be married to the insured worker for at least 1 continuous year before she can receive benefits based on her husband's record. …
Using Social Security administrative data, we compare the cross-cohort characteristics and 5-year employment outcomes of young adults (aged 18–39) who were first awarded Social Security disability benefits from 1996 through 2007.
Previous research indicates that small businesses tend to be less likely than larger ones to offer retirement benefits to their employees. This means that resolving issues of adequate retirement savings requires an understanding of the role businesses play in retirement policy and how a business's decision on offering retirement benefits determines workers' choices regarding retirement savings. The relationship between firm size and retirement plan sponsorship is particularly important given the Obama administration's retirement proposals to create automatic individual retirement accounts. Obviously, accurate information is important for policymakers not only in formulating retirement income-security policies that would better target workers not covered by a retirement plan, but also to assess more fully the impact of policy alternatives on workers' retirement plan behavior.In this article, we build on our previous work and provide an update of the relationship between pension plan coverage and firm size among private-sector workers, using data from the Survey of Income and Program Participation (SIPP) for 3 years: 2006, 2009, and 2012. More specifically, we report on three important measures: the proportions of employers who offered a retirement plan, the proportions of employees who participated in a retirement plan, and the proportions of employees who took up a retirement plan conditional on their employers having offered one. Following previous work, our measures of pension coverage and participation take into account, and correct for, survey-response errors in the SIPP by using information in the W-2 records regarding tax-deferred earnings to defined contribution plans. Our findings show that compared with 2006, the offer and participation rates of any pension plan increased in 2009 and 2012; the differences were relatively small, but statistically significant. Although offer and participation rates differed substantially by firm size throughout the period, take-up rates (conditional on plans being offered) differed little among workers in firms with 10 or more employees.Selected AbbreviationsDB defined benefitDC defined contributionIRA individual retirement accountSIPP Survey of Income and Program ParticipationIntroductionPrevious research has shown that a substantial proportion of workers in the private sector have no access to a pension plan,1 and that workers in large firms are more likely to have access to pensions than those in small firms. Hence, the primary challenge for both researchers and policymakers interested in retirement security has been how to expand pension coverage and participation, as a means of saving for retirement, so that workers have enough income in retirement to avoid sharp drops in their living standards. Policymakers have implemented many options-such as Simplified Employee Pension (SEP) plans and Savings Incentive Match Plans for Employees (SIMPLE)-to help small businesses overcome some of the obstacles of sponsoring retirement plans. More recently, the current administration has proposed new policies to expand retirement savings. Under the Obama administration's automatic individual retirement account (IRA) proposal, employers in business for at least 2 years and who have more than 10 employees would be required to offer an automatic IRA option to employees, under which regular contributions would be made to that IRA through payroll deductions. However, employers who sponsor a qualified retirement plan (for example, SEP or SIMPLE) for their employees would not have to provide an automatic IRA for those employees. According to the administration's proposal, employers would not have to match employee contributions nor choose or arrange default investments options. Instead, a low-cost, standard type of investment alternative would be prescribed by statute or regulation (Department of the Treasury 2014, 141-144). It is estimated that through this automatic IRA program, approximately 75 million employees working in private-sector firms with more than 10 employees who are not currently offered any pension plan would be able to save for retirement (Iwry and John 2007). …
Introduction The Social Security Disability Insurance (DI) and Supplemental Security Income (SSI) programs, administered by the Social Security Administration (SSA), provide income support to individuals who have long-lasting medical impairments and are unable to work at a substantial level. In August 2015, around 13 million working-age adults received benefits from one or both of these programs (SSA 2015). This article presents new statistics on the extent to which beneficiaries have given up their benefits to return to work since the introduction of the Ticket to Work (TTW) program in 2002, particularly in the period before and after July 2008, when SSA significantly changed the program's regulations to spur participation among both beneficiaries and employment service providers. Many DI and SSI beneficiaries are interested in working, even if they are not able to do so at a significant or sustained level. Eligibility for federal disability benefits is partially based on the inability to engage in substantial gainful activity (SGA), which in 2015 is defined as equivalent to monthly earnings of $1,090 for nonblind beneficiaries and $1,820 for blind beneficiaries. Despite this criterion, several program provisions are designed to allow participants to test their ability to return to work. Under DI, beneficiaries are granted a 9-month trial work period (TWP) within a rolling 60-month window during which they can earn an unlimited amount and yet retain benefits. Following the completion of the TWP, benefits are suspended for work in any of the following 36 months in which beneficiaries engage in SGA (except for a 3-month grace period). After this 36-month period (and any remaining grace-period months), benefits are terminated in the first month of SGA. (1) SSI rules are quite different; after a small earnings disregard, benefits are reduced by $1 for every $2 in earnings, meaning that many beneficiaries may earn approximately twice as much as the federal benefit rate and retain some level of benefits. (2) Both programs include provisions that allow beneficiaries to maintain associated health insurance coverage (from Medicare in the case of DI and from Medicaid in the case of SSI) even after cash benefits have been terminated because of SGA. Because of the strict and sometimes lengthy determination process required to prove inability to engage in SGA, beneficiaries often fear losing their disability benefits if they become employed and earn above certain thresholds. Moreover, once individuals with disabilities have left the labor force and met either program's eligibility criteria, they may suffer skills deterioration and loss of human capital that may complicate labor force reentry. A large body of literature has explored the magnitude of the labor-supply disincentive effects of the DI program; two of the most recent examples are Maestas, Mullen, and Strand (2013) and French and Song (2014). Recognizing that many beneficiaries feared losing benefits and lacked knowledge of program rules and work supports, Congress enacted the Ticket to Work and Work Incentives Improvement Act of 1999 (Ticket Act). That legislation put into place a number of new policies and programs designed to support the returnto-work efforts of disability program beneficiaries. The Ticket Act focused on increasing the extent to which beneficiaries forgo cash disability benefits, in whole or in part, because of work. The centerpiece of the Ticket Act is the TTW program; its implementation began in February 2002. TTW expanded the ways in which SSA pays service providers for supporting beneficiaries in their employment efforts. Under TTW, providers receive compensation when beneficiaries achieve certain specified earnings levels or, in the case of outcome payments (described later), benefit cessation because of work. This article presents new statistics on TTW participation and participant work activity. First, we present annual statistics from 2002 through 2010 on TTW participation to show that enrollment growth was initially slow, but accelerated after revised program regulations went into effect in July 2008. …
This study examines workers who had physical or mental impairments that prevented continued work in their pre-onset occupation but did not qualify for Disability Insurance (DI) benefits. More specifically, we examine workers who experienced the onset of such impairments, applied for DI once, were denied benefits on the basis of residual ability to work in other occupations, and did not appeal the decision. In contrast to allowed claimants, this group of individuals continued to participate in the labor market at comparatively high rates. We describe their post-onset labor market experience, including employment rates and earnings losses by type of impairment.
Introduction Workers receive Social Security retirement and disability benefits based on their covered earnings. Members of their families may also qualify for benefits based on those earnings--for example, their survivors, spouses, and children. Benefits for family members have always been limited by the family maximum rules. In 1980, Congress established more restrictive rules for the families of disabled workers, reflecting concerns that some disability beneficiaries were financially as well off, or better off, when receiving benefits than they were when working. The family maximum rules have evolved over time and have become more complicated for all beneficiaries, which in some cases make them difficult to implement. If not implemented correctly, the Social Security Administration (SSA) may pay beneficiaries improperly. In this article, we describe the current family maximum rules using illustrations of different benefit types. We also describe the rules for beneficiaries entitled to benefits on multiple earnings records. We explain how the family maximum rules have evolved over time and then provide an analysis of the rules at different earnings levels, by comparing those for retirement and survivor families with those for disability families. Using Modeling Income in the Near Term, Version 6 (MINT6) data, we analyze who is affected by the family maximum and to what extent their benefits are changed. Major Findings SSA's family maximum rules are complex and affect beneficiaries in different ways, depending on their earnings levels and benefit types. In particular, the rules that apply to disability beneficiary families differ significantly from those that apply to retirement and survivor beneficiary families. Our findings include the following: * The disabled family maximum affects many more families and a wider range of family sizes than the retirement and survivor family maximum because more restrictive rules apply to disability benefits. * Retirement and survivor beneficiary families are not affected by the family maximum rules unless three or more family members receive benefits; when those beneficiary families are affected, auxiliary beneficiaries (or auxiliaries) always receive partial benefits. * Disability beneficiary families, by contrast, sometimes lose all of their auxiliary benefits, even in cases where only one family member qualifies. All disability families with three or more beneficiaries are affected by the family maximum and more than half of families with two beneficiaries are affected. * Among families affected by the family maximum, reductions can be substantial. For affected disabled-worker families, we estimate that the median reduction is about 33 percent; for survivor families, about 23 percent; for retired-worker families, about 14 percent. For some family members of disabled workers, the family maximum rules prevent a benefit from being paid at all. Selected Abbreviations AIME average indexed monthly earnings AWI average wage index DI Disability Insurance MINT Modeling Income in the Near Term OASI Old-Age and Survivors Insurance PIA primary insurance amount SSA Social Security Administration Current-Law Family Maximum Rules In this section, we provide the current basic family maximum rules for retirement and survivor benefits and for disability benefits. We also discuss current-law rules that are common to both types of benefits. Rules for Retirement and Survivor Benefits The family maximum formula for Old-Age and Survivors Insurance (OASI) benefits is based on a beneficiary's primary insurance amount (PIA). The PIA is a beneficiary's basic Social Security benefit amount before adjustments for retirement age, earnings, and other factors. (1) For a worker who reaches age 62 or dies in 2015 (before reaching age 62), SSA calculates the family maximum using the following formula: 150 percent of the first $1,056 of the worker's PIA plus 272 percent of the worker's PIA over $1,056 through $1,524 plus 134 percent of the worker's PIA over $1,524 through $1,987 plus 175 percent of the worker's PIA over $1,987. …
Social Security Disability Insurance beneficiaries who return to work and earn above a substantial gainful activity level can lose their cash benefits, which is often considered a disincentive to employment. The Benefit Offset National Demonstration (BOND) project tests a policy that removes this sudden loss by gradually reducing cash benefits through an offset and by offering varying levels of benefits counseling. These case studies share the experiences of three individuals who are successfully reaching their return-to-work goals as they participate in the BOND project.
We follow six cohorts of childhood Supplemental Security Income (SSI) disability awardees for a time horizon up to 30 years, using program records on demographics, type of impairment, SSI and Disability Insurance (DI) recipiency, and mortality. We use descriptive analysis and multinomial logit regression for repeated cross-sections of the six award cohorts, controlling for years since first award. For all award cohorts, many individuals transition from SSI recipiency to DI or nonbeneficiary status. Others die over time. Accounting for DI program participation is necessary to obtain a full picture of disability program participation in adulthood. SSI-only recipiency substantially diminishes in adulthood. However, DI involvement increases. An increasing proportion of individuals receives both benefit types (SSI and DI) as the cohorts age in adulthood. The trajectories of outcomes across successive award cohorts change in important ways. First, we observe a strong trend of increased transitions to nonbeneficiary status among survivors as we move from early award cohorts to later cohorts, with a sharp upward shift around the time of welfare reform in the mid-1990s. Second, the data show a secular decline in mortality across award cohorts. The data suggest that a substantial portion, but not all, of that decline has been affected by the Supreme Court's Zebley decision. Increased incidence of transitions to nonbeneficiary status and reduced mortality across award cohorts have opposing effects on the duration of disability benefit receipt.
Introduction Social Security benefits are the most widely received source of income among Americans aged 65 or older, and they are the largest source of income for more than half of aged beneficiaries (Social Security Administration [SSA] 2014). In light of Social Security's importance to current and future retirees, economic trends that could affect workers' retirement benefits are of interest to SSA, Congress, and the public. One such trend is growing inequality in earnings. In general, Social Security benefits increase with career-average earnings, and earnings increase with education and work experience. (1) Many personal, social, and economic variables affect earnings, but social scientists have long recognized the central role played by educational attainment. More than half-century ago, economists Jacob Mincer (1958) and Gary Becker (1964) proposed theories of human capital in which the knowledge, skills, and abilities acquired through formal education strongly influence both employment and earnings. Those theories continue to inform much research in economics, sociology, and public policy today. Economists and other social scientists typically are cautious about attributing causation to relationships that may be mere correlations. Nevertheless, the empirical evidence gathered over more than 50 years is so compelling that asserting cause-and-effect relationship between education and earnings would likely encounter little disagreement among those who study labor markets (Card 1999, 2002; Heckman, Lochner, and Todd 2003). (2) The rapidly rising cost of higher education might call into question whether attending college continues to be worth the expense. However, recent research suggests that earning 4-year college degree remains good investment for the average student. Researchers at the Federal Reserve Bank of San Francisco found that college graduates fully recoup the costs of higher education by age 40, on average; and that in inflation-adjusted terms, a college graduate can expect to earn $830,800 more than high graduate over the course of lifetime (Daly and Bengali 2014). The authors found that the earnings premium for college graduates resulted not just from higher annual salaries, but also from lower rates of unemployment, even during times of recession. A separate analysis by researchers at the Federal Reserve Bank of New York found that the financial return of college education remained high in spite of rising tuition and falling earnings because the wages of those without college degree have also been falling, keeping the college wage premium near an all-time high while reducing the opportunity cost of going to school (Abel and Deitz 2014). Selected Abbreviations AIME average indexed monthly earnings AWI average wage index FRA full retirement age MINT Modeling Income in the Near Term PIA primary insurance amount SIPP Survey of Income and Program Participation SSA Social Security Administration If the earnings of college graduates rise more rapidly (or fall more slowly) than the earnings of workers without 4-year degree, earnings inequality will increase--all else being equal. However, earnings inequality in itself is not necessarily bad. Indeed, if earning college degree did not produce higher earnings for the typical graduate, acquiring college degree would not be worthwhile investment of time and money. In some respects, earnings inequality is like the extra weight that many of us carry around: What matters is how much you have, where you have it, and how fast it is growing. Abundant research indicates that the United States has more earnings inequality than other developed nations, that the inequality is evident throughout the earnings distribution (not just between the top 1 percent and everyone else), and that it has grown substantially in recent years (Bowlus and Robin 2004; Lemieux 2006; Goldin and Katz 2007; Autor, Katz, and Kearney 2008; Favreault 2009; Favreault and Haaga 2013; Autor 2014; Mitchell 2014). …
This article analyzes subject recruitment for the Mental Health Treatment Study (MHTS) — a national 23-site randomized trial that provided access to effective treatment and rehabilitation interventions for Social Security Disability Insurance (DI) beneficiaries with psychiatric impairments. We use regression analyses to better understand the likely take-up rate for MHTS replications and/or expansions and to identify characteristics of DI beneficiaries most likely to enroll. Results indicate that among potential MHTS subjects with confirmed telephone contacts, the take-up rate was 14.0 percent — well above rates for previous Social Security Administration randomized trials. Regression results suggest, as an upper bound, that take-up rates in the 18.0-25.0 percent range could be obtained by targeting recruitment to the group of beneficiaries that has administrative records of recent vocational or labor-market activity. Future interventions with large, heterogeneous target populations should consider the implications here for generalizing intervention impacts and modifying recruitment strategies.
Claiming Social Security retirement benefits before the full retirement age (FRA) results in permanently lower benefits. Therefore, delaying claiming is often considered the best decision economically. We examine a number of novel changes aimed at encouraging individuals to delay claiming in the months and years before reaching their FRA, such as changing the early retirement reductions, paying lump sums, rewarding work with bonuses, instituting a lottery, and reforming the earnings test. We use Modeling Income in the Near Term, Version 6 data to determine the socioeconomic characteristics of individuals who claim at various ages and analyze one of the incentives to encourage delayed claiming: changing the early retirement reductions. We model the incentive first with no assumed behavioral response, and then we assume a 1-year delay in benefit claiming. We find that the delay in claiming would result in larger increases to both monthly and lifetime benefits than would the incentive alone.
The Social Security Administration’s (SSA’s) Modeling Income in the Near Term (MINT) estimates income/wealth of future retirees. Estimates are based on demographic information from the Survey of Income and Program Participation: individual earnings histories and projections of interest rates, wage growth, mortality rates, and disability rates. Historically, MINT simulations were based exclusively on SSA’s Office of the Chief Actuary’s (OCACT’s) intermediate-cost projections of key demographic/economic variables. The authors present the results of a sensitivity analysis in which they ran MINT using OCACT’s low-cost/high-cost projections of mortality and disability trends. Those simulations estimated characteristics of the population aged 65 or older in 2040 under alternative projections of mortality/disability trends. The authors then describe simulations in which future real rates of return on stocks held in retirement accounts differ from the historical mean real rate of return used in baseline simulations. Sensitivity analyses can help MINT users choose model parameters with the greatest impact on simulation results.
Using data from the Health and Retirement Study linked with restricted data from the Social Security Administration, this article compares retirement resources of immigrant and native-born workers. Results suggest that although immigrants have lower levels of Social Security benefits than workers born in the United States, when holding demographic characteristics constant, immigrants have higher levels of net worth. The estimated immigrant differentials vary a great deal by number of years in the United States, with the most recent immigrants being the least prepared for retirement.
