Will Social Security Keep Fewer of Tomorrow’s Elderly Out of Poverty?
The brief’s key findings are:
- Social Security has been very successful in reducing old-age poverty, but this success could be challenged if benefits are cut to close the program’s funding gap.
- The effect of benefit cuts on poverty depends on how poverty is defined.
- The official measure of poverty is a static concept that does not account for rising living standards.
- Thus, a spike in poverty from benefit cuts would be transient, as wage growth would push up Social Security benefits over time.
- In contrast, a supplemental measure of poverty, which many experts consider more accurate, increases the poverty thresholds along with wage growth.
- Under this measure, then, benefit cuts would cause a long-lasting rise in poverty rates, as wage growth would push up poverty thresholds as well as benefit levels.