Typically, benefits from Social Security replace approximately 40% of preretirement income. Social Security alone, however, was never intended to be sufficient for a secure retirement or to stand alone, the authors of the report said.
Their analysis also finds that without income from Social Security in 2013, the number of poor older U.S. households would have increased by more than 200% to 11 million households.
Without income from defined contribution accounts, the estimated number of poor older households would have increased by 5%, the report found.
The study also looked at the impact of retirement income on public assistance and Medicaid costs, and Social Security again had the strongest impact. Without Social Security income in 2013, the number of older households receiving public assistance would have increased by nearly 45%, while the number of older persons receiving Medicaid would have increased by more than 40%.
Without income from pensions, the number of older households receiving public assistance would have increased by almost 19%, and the number of older persons receiving Medicaid would have increased by more than 15%. The impact of defined contribution income was smaller for both measures.
Without income from DB pensions, the combined costs for public assistance and Medicaid benefits to older households would have increased by almost $13.5 billion in 2013. Without Social Security income, combined costs would have increased by nearly $34 billion in 2013.
“The findings of this research reveal that Social Security has a profound role to play in preventing elder poverty,” Doonan said. “Our analysis indicates that if Social Security income had been just 10% higher in 2013, there would have been about 500,000 fewer poor older households. Accordingly, protecting and expanding Social Security should be a top priority for policy makers interested in the financial security of America’s middle class and to keep them from falling into poverty.”