Tuesday, September 30, 2014

The National Bureau of Economic Research: Social Security and Economic Poverty

Social Security is often mentioned as a likely contributor to the decline in elderly poverty. Enacted in 1935, the Social Security system experienced rapid benefit growth in the post-WWII era. In fact, there is a striking association between the rise in Social Security expenditures per capita and the decline in elderly poverty, as Figure 1 illustrates (with both series scaled to fit on the same figure).

Three if's.

If I were single and monthly Social Security checks were my only income, I'd be living "comfortably" above the poverty level of $11,173 (that's $214.87 a week), but an annual income of $19,440 ($373.85 a week) would require living on a strict budget. 

If I lived in my own (i.e., current) home, property taxes would take a 23% chunk out of my annual income.

If this were the financial state of my life, it's unlikely I'd have any savings or other cushion.   (Or be living in a house, for that matter.)

Gallup Poll: Retirement Savings Are America's Nightmare.  (Money News, 4/24/2014)

*That's $14,400 annually, $276.92 per week.
According to the AARP, Social Security payments, which average only $1,200* per month in the United States, are the principal source of income for nearly half of older Americans.

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