Will Social Security keep fewer of tomorrow's elderly out of poverty?

Abstract

The brief's key findings are: (1) Social Security has been very successful in reducing old-age poverty, but this success could be challenged if benefits are cut to close the program’s funding gap. (2) The effect of benefit cuts on poverty depends on how poverty is defined. (3) The official measure of poverty is a static concept that does not account for rising living standards. (4) Thus, a spike in poverty from benefit cuts would be transient, as wage growth would push up Social Security benefits over time. (5) In contrast, a supplemental measure of poverty, which many experts consider more accurate, increases the poverty thresholds along with wage growth. (6) Under this measure, then, benefit cuts would cause a long-lasting rise in poverty rates, as wage growth would push up poverty thresholds as well as benefit levels.