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Social Security Keeps 22 Million Americans Out of Poverty: A State-By-State Analysis

UPDATED
October 25, 2016

Social Security benefits play a vital role in reducing poverty in every state.  Without Social Security, 22.1 million more Americans would be poor.Without Social Security, 22.1 million more Americans would be poor, according to the latest available Census data.  Although most of those whom Social Security keeps out of poverty are elderly, nearly a third are under age 65, including 1.1 million children.  (See Table 1.)  Social Security is particularly important for elderly women and minority families, who have fewer retirement resources outside of Social Security.  Depending on their design, reductions in Social Security benefits could significantly increase poverty, particularly among the elderly.

 

TABLE 1
Effect of Social Security on Poverty, 2015
Age Group Percent in Poverty Number Lifted Out of Poverty By Social Security
  Excluding Social Security Including Social Security  
Children Under 18 21.2% 19.7% 1,078,000
Adults Ages 18-64 15.4% 12.4% 5,944,000
Elderly Age 65 And Over 40.5% 8.8% 15,067,000
Total, All Ages 20.5% 13.5% 22,090,000

Source: CBPP, based on data from the Census Bureau Current Population Survey, March 2016

 

Social Security Lifts 15 Million Elderly Americans Out of Poverty

Most people aged 65 and older receive the majority of their income from Social Security.[2]  Without Social Security benefits, 40.5 percent of elderly Americans would have incomes below the official poverty line, all else being equal; with Social Security benefits, only 8.8 percent do.  (See Figure 1.)  These benefits lift 15.1 million elderly Americans above the poverty line.

Figure 1
Social Security Dramatically Cuts Poverty Among Seniors

Social Security Lifts More Than 1 Million Children Out of Poverty

Social Security is important for children and their families as well as for the elderly.  About 6.5 million children under age 18 (9 percent of all U.S. children) lived in families that received income from Social Security in 2015, according to Census data.  This figure includes children who received their own benefits as dependents of retired, disabled, or deceased workers, as well as those who lived with parents or relatives who received Social Security.  In all, Social Security lifts 1.1 million children out of poverty.

Social Security records show that 3.1 million children under age 18 qualified for Social Security payments themselves in December 2015.  (See Appendix Table 2.)  Of these, 1.2 million were the survivor of a deceased worker.  Another 1.6 million received payments because their parent had a severe disability.  And 331,000 children under 18 received payments because their parent or guardian was retired.[3]

Elderly Women and Minorities Particularly Vulnerable to Poverty

Social Security is especially important for elderly women and minority families.  Women tend to earn less than men, take more time out of the paid workforce, accumulate less savings, and receive smaller pensions.  Women also live longer than men, on average, so many outlive their spouses and savings, leaving them increasingly impoverished as they age.  Social Security brings 8.8 million elderly women out of poverty, as Table 2 shows. 

African Americans and Latinos have lower-than-average lifetime earnings, as well as fewer opportunities to save for retirement and earn pensions.  Without Social Security, the poverty rate among elderly Latinos would approach 50 percent, and the poverty rate among elderly African Americans would exceed 50 percent. 

 

TABLE 2
Effect of Social Security on Elderly Poverty by Sex and Race, 2015
Demographic Group Percent in Poverty Number Lifted Out of Poverty By Social Security
  Excluding Social Security Including Social Security  
Sex      
Men 35.8% 7.0% 6,111,000
Women 44.3% 10.3% 8,956,000
Race/Ethnicity      
White 39.4% 6.6% 12,040,000
African American 50.6% 18.2% 1,363,000
Latino 44.7% 17.5% 1,051,000
Other 34.4% 12.4% 613,000
Total, Age 65+ 41.5% 8.8% 15,067,000

Source: CBPP, based on data from the Census Bureau Current Population Survey, March 2016.

 

Social Security Reduces Poverty in Every State

Social Security reduces elderly poverty dramatically in every state in the nation, as Figure 2 and Appendix Table 1 show.[4]  Without Social Security, the poverty rate for those aged 65 and over would meet or exceed 40 percent in more than half the states; with Social Security, it is less than 10 percent in two-thirds of states.  Social Security lifts more than 1 million elderly people out of poverty in California, Florida, and Texas, and over half a million in Illinois, Michigan, New York, North Carolina, Ohio, and Pennsylvania.

 

Figure 2
Social Security Reduces Number of Elderly Poor in Every State

 

Technical Note

This analysis uses the Census Bureau’s official definition of poverty.  In determining poverty status, the Census Bureau compares a family’s cash income before taxes with poverty thresholds that vary by the size and age of the family.  The poverty thresholds in 2015 were $11,367 for an elderly individual, $14,342 for an elderly couple, and $24,257 for an average family of four.[5]  To calculate the anti-poverty effects of Social Security, we determined each family’s poverty status twice — first excluding and then including the family’s Social Security benefits.

Our analysis considers the non-institutionalized population using data from the Census Bureau’s Current Population Survey (CPS), the survey that is used to produce official poverty estimates.[6]  Each March the CPS collects information on personal income, health coverage, and other social and economic characteristics for the previous year.  The national estimates reported here are for 2015.  The state-by-state estimates are based on a two-year average (for 2014 and 2015) to improve their reliability.[7]

This analysis does not take into account other changes that would occur in the absence of Social Security.  If Social Security did not exist, many elderly individuals likely would have saved somewhat more and worked somewhat longer, and many might live with their adult children rather than in their own households.  Other studies confirm, however, that Social Security has made a very large contribution to reducing poverty and that cutting Social Security benefits could substantially increase poverty among the elderly.[8]

 

Appendix table 1
Effect of Social Security on Poverty Among the Elderly by State, 2014-2015
  Percent in Poverty Number Lifted Out of Poverty By Social Security
  Excluding Social Security Including Social Security  
Alabama 52.3% 13.0% 281,000
Alaska 29.5% 8.1% 16,000
Arizona 40.6% 12.0% 286,000
Arkansas 50.9% 9.7% 189,000
California 34.8% 10.7% 1,203,000
Colorado 32.5% 5.4% 203,000
Connecticut 32.1% 4.9% 143,000
Delaware 38.9% 8.8% 47,000
Dist. of Columbia 35.7% 16.2% 16,000
Florida 48.2% 10.9% 1,359,000
Georgia 47.5% 10.8% 472,000
Hawaii 31.2% 7.6% 54,000
Idaho 43.1% 7.3% 83,000
Illinois 38.3% 8.4% 564,000
Indiana 41.6% 9.5% 319,000
Iowa 39.0% 8.5% 149,000
Kansas 40.0% 7.6% 128,000
Kentucky 53.1% 15.7% 263,000
Louisiana 50.8% 15.5% 204,000
Maine 42.7% 7.7% 91,000
Maryland 32.5% 8.4% 190,000
Massachusetts 38.0% 9.5% 295,000
Michigan 39.4% 6.0% 523,000
Minnesota 34.3% 5.8% 244,000
Mississippi 56.9% 14.5% 173,000
Missouri 40.5% 6.8% 313,000
Montana 40.6% 5.7% 60,000
Nebraska 38.9% 5.5% 89,000
Nevada 40.2% 9.8% 124,000
New Hampshire 31.9% 6.3% 53,000
New Jersey 33.2% 6.7% 345,000
New Mexico 46.6% 13.8% 111,000
New York 39.9% 11.1% 892,000
North Carolina 46.8% 10.0% 520,000
North Dakota 42.6% 11.8% 32,000
Ohio 40.3% 8.9% 563,000
Oklahoma 46.0% 9.9% 198,000
Oregon 35.7% 5.9% 198,000
Pennsylvania 40.5% 7.0% 724,000
Rhode Island 38.3% 8.2% 47,000
South Carolina 48.8% 9.5% 302,000
South Dakota 41.9% 9.7% 43,000
Tennessee 49.3% 9.6% 413,000
Texas 42.1% 10.6% 1,027,000
Utah 35.5% 6.9% 92,000
Vermont 35.7% 5.9% 30,000
Virginia 38.2% 9.0% 336,000
Washington 35.1% 7.4% 301,000
West Virginia 51.6% 12.0% 132,000
Wisconsin 42.1% 5.7% 321,000
Wyoming 36.0% 8.2% 22,000
Total, Persons Age 65+ 41.0% 9.4% 14,778,000

Notes: Income is family cash income. The poverty rate “including Social Security” is the official poverty rate.  We do not include Social Security beneficiaries who live in the territories or abroad in our analysis because the CPS does not collect the relevant data for them.

Source: Center on Budget and Policy Priorities, based on data from the Census Bureau Current Population Survey, March 2015 and 2016.

 

APPENDIX TABLE 2
Social Security Beneficiaries by State and Age, 2015
  Total Age 65 and Older Age 18-64 Children Under Age 18
Alabama 1,108,543 703,486 327,938 77,119
Alaska 91,960 64,098 20,574 7,288
Arizona 1,241,101 928,451 252,571 60,079
Arkansas 679,689 438,507 193,676 47,506
California 5,651,601 4,263,483 1,133,570 254,548
Colorado 813,266 610,436 164,324 38,506
Connecticut 659,238 509,120 122,332 27,786
Delaware 196,651 145,668 42,243 8,740
Dist. of Columbia 80,546 57,147 19,402 3,997
Florida 4,334,337 3,255,864 885,022 193,451
Georgia 1,714,145 1,165,204 440,456 108,485
Hawaii 256,912 203,626 42,115 11,171
Idaho 315,571 228,202 70,861 16,508
Illinois 2,174,883 1,608,968 463,714 102,201
Indiana 1,301,948 908,675 321,031 72,242
Iowa 622,906 470,885 126,966 25,055
Kansas 528,174 386,874 114,131 27,169
Kentucky 963,497 610,903 288,712 63,882
Louisiana 868,017 569,707 235,837 62,473
Maine 329,559 230,506 82,586 16,467
Maryland 952,251 709,368 195,041 47,842
Massachusetts 1,236,248 898,173 274,793 63,282
Michigan 2,141,824 1,477,097 550,426 114,301
Minnesota 979,776 737,639 201,056 41,081
Mississippi 647,420 407,115 190,954 49,351
Missouri 1,258,256 867,678 320,392 70,186
Montana 217,758 161,420 46,378 9,960
Nebraska 330,309 251,401 64,222 14,686
Nevada 492,121 363,953 103,997 24,171
New Hampshire 288,891 205,434 67,096 16,361
New Jersey 1,583,456 1,201,412 309,058 72,986
New Mexico 408,931 286,562 97,753 24,616
New York 3,513,125 2,576,899 768,830 167,396
North Carolina 1,984,962 1,384,173 497,096 103,693
North Dakota 125,786 97,600 22,987 5,199
Ohio 2,290,813 1,634,288 543,879 112,646
Oklahoma 758,912 524,902 187,250 46,760
Oregon 818,228 609,313 177,536 31,379
Pennsylvania 2,744,424 2,000,413 618,080 125,931
Rhode Island 217,881 155,710 51,192 10,979
South Carolina 1,066,150 736,790 270,548 58,812
South Dakota 168,626 129,531 31,914 7,181
Tennessee 1,392,164 940,307 368,968 82,889
Texas 3,928,648 2,797,857 886,125 244,666
Utah 375,685 274,335 76,684 24,666
Vermont 142,755 103,346 32,736 6,673
Virginia 1,443,127 1,049,314 321,206 72,607
Washington 1,260,474 934,265 272,273 53,936
West Virginia 468,120 306,237 134,755 27,128
Wisconsin 1,170,705 855,268 264,099 51,338
Wyoming 103,689 76,924 21,662 5,103
Total 58,444,059 42,114,534 13,317,047 3,012,478
Source:  Social Security Administration, Annual Statistical Supplement, 2016, Table 5.J5.  Includes residents of territories and Americans abroad (not shown).

End Notes

[1] The authors wish to thank Raheem Chaudhry for his assistance in preparing this paper.

[2]Policy Basics: Top Ten Facts About Social Security, Center on Budget and Policy Priorities, August 12, 2016, http://www.cbpp.org/research/social-security/policy-basics-top-ten-facts-about-social-security.

[3] Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2016, Table 5.J10.

[4] We do not include Social Security beneficiaries who live in the territories or abroad in our analysis because the Census Bureau’s Current Population Survey does not collect the relevant data for them.

[5] Poverty thresholds depend on the size of the family and the ages of its members; this figure is a weighted average for families of four.  For more information, see http://www.census.gov/hhes/www/poverty/data/threshld/index.html.

[6] U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2015, September 13, 2016, https://www.census.gov/newsroom/press-releases/2016/cb16-158.html.

[7] In past versions of this report, we used a three-year average to reduce sampling error.  However, the Census Bureau redesigned some of its questions to better measure retirement income.  The CPS used the redesigned questions for the full sample starting in 2014, so we do not have enough data to compute a three-year average. See: https://www.census.gov/topics/income-poverty/income/guidance/cps-methodology-changes.html.

[8] Eugene Smolensky, Sheldon Danziger, and Peter Gottschalk, The Declining Significance of Age in the United States: Trends in the Well-Being of Children and the Elderly Since 1939, in John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey, eds., The Vulnerable, Washington: Urban Institute, 1988; Gary V. Engelhardt and Jonathan Gruber, Social Security and the Evolution of Elderly Poverty, National Bureau of Economic Research Working Paper 10466, May 2004.