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

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.

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

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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. 

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

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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]