Elderly Poverty and Supplemental Security Income

Summary

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Provided here are the absolute and relative poverty status of 2002 elderly Supplemental Security Income (SSI) recipients. Official poverty estimates are generated from the Current Population Survey's Annual Social and Economic Supplement (CPS/ASEC). The poverty study presented here differs from previous studies in that it is based on CPS/ASEC income and weight records conditionally adjusted by matching Social Security administrative data. This effort improves the coverage of SSI receipt and the accuracy of SSI estimates. The adjusted CPS/administrative matched data reveal lower 2002 poverty rates among elderly persons (with and without SSI payments) than those generated from the unadjusted CPS/ASEC data.

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Elderly Poverty and Supplemental Security Income

Elderly Poverty and Supplemental Security Income

Elderly Poverty and Supplemental Security Income

by Joyce Nicholas and Michael Wiseman

Joyce Nicholas is a social science research analyst in the Office of Program Development and Research within the Office of Retirement and Disability Policy, Social Security Administration. Michael Wiseman is a professor at George Washington University.

Acknowledgments: The authors thank Paul Davies and Howard Iams for sharing their expertise on SSA administrative data and are especially appreciative of the helpful comments and suggestions provided by Kalman Rupp, Joyce Manchester, Glenn Springstead, Tom Rush, Tom Hale, Jim Sears, and Lynn Fisher.

Abstract Selected Abbreviations ASEC Annual Social and Economic Supplement CPS Current Population Survey DER Detailed Earnings Record DI Disability Insurance FBR federal benefit rate FICA Federal Insurance Contributions Act MEF Master Earnings File NRC National Research Council OASDI Old-Age, Survivors, and Disability Insurance PHUS Payment History Update System SECA Self-Employment Contributions Act SER Summary Earnings Record SGA substantial gainful activity SIPP Survey of Income and Program Participation SSA Social Security Administration SSI Supplemental Security Income SSN Social Security number SSR Supplemental Security Record

In the United States, poverty is generally assessed on the basis of income, as reported in the Current Population Survey's (CPS's) Annual Social and Economic Supplement (ASEC), using an official poverty standard established in the 1960s. The prevalence of receipt of means-tested transfers is underreported in the CPS, with uncertain consequences for the measurement of poverty rates by both the official standard and by using alternative "relative" measures linked to the contemporaneous income distribution. The article reports results estimating the prevalence of poverty in 2002. We complete this effort by using a version of the 2003 CPS/ASEC for which a substantial majority (76 percent) of respondents have individual records matching administrative data from the Social Security Administration on earnings and receipt of income from the Old-Age, Survivors, and Disability Insurance and Supplemental Security Income (SSI) programs. Adjustment of the CPS income data with administrative data substantially improves coverage of SSI receipt. The consequence for general poverty is sensitive to the merge procedures employed, but under both sets of merge procedures considered, the estimated poverty rate among all elderly persons and among elderly SSI recipients is substantially less than rates estimated using the unadjusted CPS. The effect of the administrative adjustment is less significant for perception of relative poverty than for absolute poverty. We emphasize the effect of these adjustments on perception of poverty among the elderly in general and elderly SSI recipients in particular.

Introduction

The decline in the elderly poverty rate is often cited as a major accomplishment of national poverty policy. From 1966 through 2006, the official poverty rate for persons 65 or older declined from 28.5 percent to 9.4 percent. In 1966, elderly poverty exceeded that of adults aged 18–65 by 18 percentage points. By 1993, parity with the poverty rate of other adults was achieved, and since that year, the elderly poverty rate has generally been over a percentage-point lower than that registered for adults of "working age" (DeNevas-Walt, Proctor, and Smith 2007, 50).

Supplemental Security Income (SSI)—the nation's safety net for the aged, blind, and disabled—presumably played some role in this decline and serves to ameliorate the consequences of poverty for those who remain poor. However, assessing the contribution of SSI payments to the reduction of elderly poverty raises three issues. First, receipt of SSI is significantly underreported, so any evaluation using standard sources—notably the Current Population Survey's (CPS's) Annual Social and Economic Supplement (ASEC)—is likely unreliable (Roemer 2000; Weinberg 2006). Second, the federal SSI payment is not alone sufficient to move recipients out of poverty, so the SSI effect, if present, must occur in combination with other family resources. Third, as is widely appreciated, the poverty standard itself is controversial, and its modest empirical basis is outdated (Citro and Michael 1995; Weinb...

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