When the announcement of plans come out on ways to fix Social Security’s future funding gap people should be aware of how important Social Security benefits are in keeping people out of poverty, especially if any plan calls for reducing or cutting benefits. Social Security benefits, whether they are retirement benefits or disability benefits, are modest, so any plan that would reduce benefits would negatively impact millions of Americans. Recently the National Academy of Social Insurance issued a report, which can be see below, which shows how important Social Security benefits are in keeping people out of the poverty.
The Role of Benefits in Income and Poverty
Social Security is the major source of income for older Americans. Over 8 in 10 Americans aged 65 and older receive Social Security. For over three out of five (61 percent) of those beneficiaries, Social Security is more than half their total income, and for one in three (33 percent), it is all or nearly all of their income. Social Security is a large share of income because many Americans age 65 and older lack significant income from other sources. Pensions (from private or government employment) were received by about half of married couples (from either the husband’s or the wife’s career). Among the unmarried, 41 percent of men and 38 percent of women had pensions.
Social Security is the sole source of income for about one in five (20 percent) people aged 65 and older. Certain subgroups are particularly reliant on Social Security. Of those age 65 and older, Social Security is the sole source of income for 40 percent of Hispanics, 33 percent of African Americans, 26 percent of Asian and Pacific Islanders, 18 percent of whites, and 20 percent of unmarried women.
Social Security plays an important role in keeping older Americans out of poverty. The poverty threshold was $11,511 in 2016. About 9 percent of Americans age 65 and older is poor. If they had to rely only on their income other than Social Security, about 40 percent would be poor. Overall, Social Security keeps 22 million Americans out of poverty, including nearly 15 million seniors and 1 million children.
