The Importance of Social Security Benefits to the Income of the Aged Population

Abstract

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.

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