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James E. Williamson - One of the best experts on this subject based on the ideXlab platform.
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Social Security Benefits: Windfall Elimination Provision
2011Co-Authors: Francine J. Lipman, James E. WilliamsonAbstract:Twenty-five percent of all public employees, or more than five million state and local workers as well as one million federal workers, participate in alternative plans to Social Security. These employers and employees do not pay Social Security taxes or receive Social Security credit for their wages. These non-Social Security pension Benefits can supplement and diversify a retirement income portfolio that includes Social Security Benefits if the worker can structure his career to otherwise qualify for Social Security Benefits. Not surprisingly the interplay of Social Security with alternative pensions can be confusing and does have traps for the unwary, including the windfall elimination provision, but rewards for strategic planners. This article will describe this interplay and demonstrate undue hardships in the existing structure and suggest strategies for maximizing aggregate retirement income Benefits.
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Social Security Benefits Formula 101
2011Co-Authors: Francine J. Lipman, James E. WilliamsonAbstract:This paper is a comprehensive presentation of the Social Security Benefits formula including a brief discussion of the relatively recent means testing for Medicare premiums.
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Social Security Benefits Formula 101: A Practical Primer
2010Co-Authors: Francine J. Lipman, James E. WilliamsonAbstract:Despite the broad and deep reliance on Social Security Benefits, very few of the hundreds of millions of current and future beneficiaries understand how the program works. This article presents through a hypothetical couple some of the basic concepts of the Social Security Benefits formula.
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The Social Security Benefits Timing Decision: A Model for Lower-Income Recipients
SSRN Electronic Journal, 2004Co-Authors: James E. Williamson, Francine J. LipmanAbstract:Selecting the best age to begin Social Security Benefits is an important election for lower-income individuals. These individuals are especially vulnerable to the timing and magnitude of critical cash flow. Unfortunately, the decision models and measures being used by individuals to analyze financial decisions, including the Social Security Benefits timing decision, often are the same measures that have been developed to guide large business organizations in their financial decisions. Because of significant differences in economic flexibility, size, life cycle, mission, goals, as well as other attributes, large organization models may not fit the needs of lower-income individuals. However, lower-income individuals do need to focus on key strategic measures when making financial decisions. Therefore, new measures specifically designed to meet the unique needs of lower-income individuals should be developed. This paper illustrates one approach by measuring the quality-value of marginal Social Security benefit dollars for lower-income retirees and their families.
Francine J. Lipman - One of the best experts on this subject based on the ideXlab platform.
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the Social Security Benefits formula and the windfall elimination provision an equitable approach to addressing windfall Benefits
Journal of Legislation, 2013Co-Authors: Francine J. Lipman, Alan R SmithAbstract:Certain federal, state, and local government employees do not pay into the Social Security system, but rather pay into alternative government pension plans. For purposes of the Social Security Act, where a worker pays into an alternative government pension plan, the worker’s employment constitutes noncovered employment. Even if a worker’s employment record reflects significant periods of noncovered employment, the worker may still qualify for Social Security coverage because she satisfies the minimum requirement of 10 years (40 quarters) of earnings in Social Security covered employment. However, an employment record which reflects both covered and noncovered employment presents a challenge to equitable application of the Social Security Act. To determine the Benefits to which a worker is entitled, the Social Security Act first employs an averaging provision that considers 35 years of covered employment. Where an individual’s employment record does not reflect 35 years of covered employment, the averaging provision compresses the worker’s average earnings. Effectively, a life-time high-income worker who held both covered and noncovered employment appears to be a life-time low-income worker by operation of the averaging provision. The second step in determining a worker’s Social Security Benefits entails application of a progressive Benefits formula to the workers average earnings. By operation of the averaging provision and the progressive benefit formula, a high-income worker who held both covered and non covered employment received a higher than statutorily intended replacement rate (the ratio of Benefits to average earnings) prior to 1983. In an effort to downward-adjust Social Security Benefits for worker who held both covered and noncovered employment, Congress enacted the Windfall Elimination Provision in 1983. This article presents and examines the Windfall Elimination Provision highlighting inherent problems in its design, which include structural and administrative issues that disproportionately impact low-income workers. The article also describes and examines public misperception and resentment of the Windfall Elimination Provision, and deficiencies in the Social Security Administration’s communication efforts. The article also describes considerable legislative efforts since its enactment to modify, replace, or repeal the Windfall Elimination Provision, providing an explanation and analysis of each bill. Finally, the article presents an alternative approach to eliminating the ‘windfall’ Benefits that accrue to noncovered workers. The alternative approach balances the fundamental tenants of the Social Security system – a progressive Benefits structure and the earned right nature of Benefits. As such, the proposed legislative amendment (included in the appendix of the article) ensures equitable Benefits to noncovered workers.
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Social Security Benefits: Windfall Elimination Provision
2011Co-Authors: Francine J. Lipman, James E. WilliamsonAbstract:Twenty-five percent of all public employees, or more than five million state and local workers as well as one million federal workers, participate in alternative plans to Social Security. These employers and employees do not pay Social Security taxes or receive Social Security credit for their wages. These non-Social Security pension Benefits can supplement and diversify a retirement income portfolio that includes Social Security Benefits if the worker can structure his career to otherwise qualify for Social Security Benefits. Not surprisingly the interplay of Social Security with alternative pensions can be confusing and does have traps for the unwary, including the windfall elimination provision, but rewards for strategic planners. This article will describe this interplay and demonstrate undue hardships in the existing structure and suggest strategies for maximizing aggregate retirement income Benefits.
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Social Security Benefits Formula 101
2011Co-Authors: Francine J. Lipman, James E. WilliamsonAbstract:This paper is a comprehensive presentation of the Social Security Benefits formula including a brief discussion of the relatively recent means testing for Medicare premiums.
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Social Security Benefits Formula 101: A Practical Primer
2010Co-Authors: Francine J. Lipman, James E. WilliamsonAbstract:Despite the broad and deep reliance on Social Security Benefits, very few of the hundreds of millions of current and future beneficiaries understand how the program works. This article presents through a hypothetical couple some of the basic concepts of the Social Security Benefits formula.
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The Social Security Benefits Timing Decision: A Model for Lower-Income Recipients
SSRN Electronic Journal, 2004Co-Authors: James E. Williamson, Francine J. LipmanAbstract:Selecting the best age to begin Social Security Benefits is an important election for lower-income individuals. These individuals are especially vulnerable to the timing and magnitude of critical cash flow. Unfortunately, the decision models and measures being used by individuals to analyze financial decisions, including the Social Security Benefits timing decision, often are the same measures that have been developed to guide large business organizations in their financial decisions. Because of significant differences in economic flexibility, size, life cycle, mission, goals, as well as other attributes, large organization models may not fit the needs of lower-income individuals. However, lower-income individuals do need to focus on key strategic measures when making financial decisions. Therefore, new measures specifically designed to meet the unique needs of lower-income individuals should be developed. This paper illustrates one approach by measuring the quality-value of marginal Social Security benefit dollars for lower-income retirees and their families.
Howard M Iams - One of the best experts on this subject based on the ideXlab platform.
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Reporting accuracy of Social Security Benefits and its implications in the Health and Retirement Study
Journal of Economic and Social Measurement, 2018Co-Authors: Irena Dushi, Howard M IamsAbstract:This paper examines whether and to what extent the amount of Social Security Benefits of older survey respondents in the Health and Retirement Study (HRS) are reported accurately. Inaccurate reporting leads to biased estimates of gross Social Security Benefits, affecting estimates of elderly well-being, including the proportion of beneficiaries classified as poor or near poor. Our findings indicate that 73% of HRS respondents report only the net amount of Social Security Benefits they receive, excluding Medicare premiums. The implication is that Social Security Benefits in the HRS are underestimates of the true gross Benefits. Therefore, the HRS data overestimate the proportion of the elderly respondents who are poor or nearly poor. Finally, even after correcting for gross Benefits, Social Security income comprises at least 50% of the total family income for about half of elderly respondents.
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The Importance of Social Security Benefits to the Income of the Aged Population
Social Security Bulletin, 2017Co-Authors: Irena Dushi, Howard M Iams, Brad TrenkampAbstract:Social Security Benefits are the most important source of U.S. retirement income. Over time, however, trends in employer-provided pension offerings, societal changes, and Social Security program rule changes have altered the distribution of income by source among the aged population. Some researchers have argued that the Current Population Survey (CPS) does not properly measure income from retirement accounts and thus overstates reliance on Social Security income. To address such concerns, the Census Bureau revised income-related questions for the 2015 CPS. This note examines reliance on Social Security Benefits among people aged 65 or older as measured by the 2015 CPS and two other major surveys. All three surveys report that roughly half of the aged population live in households that receive at least 50 percent of total family income from Social Security and about one-quarter of the aged live in households that receive at least 90 percent of family income from Social Security. Introduction The traditional major sources of retirement income in the United States--often called the three-legged stool or the three pillars--are Social Security Benefits, employer-provided pensions (including retirement accounts), and income from assets or savings. Social Security is a Social insurance program that provides an inflation-indexed lifetime annuity to aged beneficiaries. In addition to enjoying the protection provided by indexing, a prospective beneficiary who delays claiming Social Security Benefits essentially purchases additional longevity insurance--reducing the risk of "running out of savings"--by raising his or her lifetime monthly benefit (Shu, Payne, and Sagara 2014; Shoven and Slavov 2012). Many observers regard Social Security Benefits as the base of retirement income, particularly because Benefits are a steady and reliable resource for almost all aged households (Brady, Burham, and Holden 2012; American Council of Life Insurers, American Benefits Council, and Investment Company Institute 2013; Poterba 2014). Because Social Security Benefits represent a substantial portion of the income of Americans aged 65 or older (Social Security Administration [SSA] 2002, 2012, 2014, 2016a, 2016b), accurate measurements of that portion are important to researchers and policymakers (Banerjee 2013; Employee Benefit Research Institute 2013; Miller and Schieber 2013, 2014). Using data from the Current Population Survey (CPS), SSA estimates that in 2014, about 84 percent of people aged 65 or older received Social Security Benefits; and among those in the bottom 40 percent of the income distribution, Benefits accounted for an average of around 84 percent of total income (SSA 2016b). Some analysts have criticized the use of CPS data to underlie such estimates. Research has suggested that the CPS does not adequately measure income from certain sources--in particular, income from retirement accounts, such as individual retirement accounts (IRAs) or defined contribution (DC) plans (Miller and Schieber 2014). Specifically, researchers have argued that estimates based on CPS data were likely to overstate older Americans' reliance on Social Security Benefits and to understate their reliance on income from retirement accounts, particularly among lower-income respondents. In response, the Census Bureau changed the income questions in the 2015 CPS, aiming to account more accurately for income drawn from retirement accounts. In addition, trends in recent decades in employer-provided pension offerings, societal changes, and Social Security program rule changes may have affected the relative importance of different income sources for older Americans, particularly that of Social Security. Thus, it is important for policymakers to have an accurate picture of the composition of retirement income so that any proposed changes to Social Security may better address the needs of the aged. This article assesses the extent to which Americans aged 65 or older rely on Social Security Benefits. …
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Education, Earnings Inequality, and Future Social Security Benefits: A Microsimulation Analysis
Social Security Bulletin, 2015Co-Authors: Patrick J. Purcell, Howard M Iams, Dave ShoffnerAbstract:This article explores how faster rates of wage growth for college graduates than for nongraduates could affect the Social Security Benefits of future retirees. Using a Social Security Administration microsimulation model called Modeling Income in the Near Term, the authors estimate the effect of different rates of wage growth by educational attainment on the future earnings and Social Security Benefits of individuals born between 1965 and 1979, sometimes referred to as “Generation X.” They find that for members of the 1965-1979 birth cohorts, different rates of wage growth by education would substantially increase the gap in annual earnings between college graduates and nongraduates, but that differences in Social Security Benefits would increase by a smaller proportion, primarily because of Social Security’s progressive benefit formula.
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Cost-neutral policies to increase Social Security Benefits for widows: a simulation for 1992.
Social security bulletin, 1998Co-Authors: Howard M Iams, Steven H SandellAbstract:by Howard M. Iams and Steven H. Sandell* Among older women, widows are more likely to live in poverty than married women. Thus, increasing Social Security Benefits to widows seems desirable. Shifting some Social Security Benefits from the period when women live as part of a couple to the period when they are widows could reduce poverty. This article uses the 1991 Survey of Income and Program Participation exactly matched to the Social Security Administration's record of Benefits to evaluate the effect on poverty rates of four cost-neutral proposals that transfer Social Security Benefits from married couples to surviving widows. The policies would moderately decrease poverty rates among older women by reducing the rate for widows more than the slight increase in the rate for couples. The evaluated proposals include a proposal supported by the majority of the 1994-96 Advisory Council on Social Security that would calculate the survivor's benefit as 75 percent of the couple's benefit, reduce the spouse's benefit from 50 to 33 percent of the husband's benefit, and reduce Benefits by 1.5 percent. Poverty of the elderly mainly occurs among women who are not married, particularly widows. In 1992, less than 5 percent of married women aged 62 or older had family incomes below the poverty line, compared with nearly 20 percent of widows and over 20 percent of divorced, separated, and never married women (chart 1). About 60 percent of older women in poverty were widows (chart 2). Increasing the Social Security Benefits of widows would lower their poverty rates. Given the long-run fiscal pressures facing Social Security, increased Benefits should be financed without increasing program costs. A possible funding source would be to reduce Benefits of married women. One proposal is to finance higher widow Benefits by reducing spouse Benefits to single earner married couples (1994-96 Advisory Council on Social Security 1996; Burkhauser 1994). A supplementary benefit reduction to all beneficiaries may be required to fund the benefit increase. Another possibility is to transfer some of couples' lifetime Benefits from the period when women are beneficiary wives to the period when women live alone as widows (Warlick 1985; Steuerle and Bakija 1994; Sandell and Iams 1997). An actuarially fair arrangement implies that a $1 decrease in a couple's Benefits can finance about a $ 1.45 increase in the survivor's Benefits reflecting the longer life expectancy of survivors (usually the widow). This article evaluates the poverty effects of the four proposals considered by the Advisory Council to increase Social Security Benefits for widows, while financing it with benefit reductions concentrated on married couples. A majority of the 1994-96 Advisory Council on Social Security (1996) recommended one of the proposals-one that guarantees widows a benefit of 75 percent of the couples' total benefit. The recommended proposal would finance the increased generosity in the formula used to calculate Benefits as widows by reducing spouse Benefits to 33 percent from the 50 percent of the highest earner's benefit and slightly reducing Benefits of all beneficiaries. This article also examines the effects of the three other proposals that provide actuarially fair increases in widow Benefits financed by reducing Benefits of retired couples. The analysis uses the 1991 panel of the Survey of Income and Program Participation (SIPP) to generate estimates for calendar year 1992.1 The article is presented in five sections: The first section describes the nature of Social Security Benefits, the second section describes the four proposals, the third presents the empirical analysis with a discussion of methodology and results, the fourth section discusses conclusions, and the fifth section contains the technical appendix. I. Social Security Benefits Aged men and women usually receive Social Security current law Benefits either as retired workers, spouses, or widow(er)s. …
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reducing women s poverty by shifting Social Security Benefits from retired couples to widows
Journal of Policy Analysis and Management, 1997Co-Authors: Steven H Sandell, Howard M IamsAbstract:This article examines proposals to transfer Social Security Benefits from married couples to surviving widows in terms of effects on poverty rates, trust fund expenditures, and Supplemental Security Income (SSI) expenditures. Because widows are much more likely to be living in poverty than older married women, it makes sense to consider Social Security Benefits in a lifetime framework and transfer some Benefits from the time both the husband and wife are alive to the time when there is only one survivor, usually the wife. Because of expected life span and age differences of marital partners, a $1 reduction of the couple's benefit can finance a $1.45 increase in the widow's benefit. The 1990 Survey of Income and Program Participation (SIPP) matched to the Social Security Administration's benefit records are the basis for the estimates.
John Bailey Jones - One of the best experts on this subject based on the ideXlab platform.
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The effects of collecting income taxes on Social Security Benefits
Journal of Public Economics, 2018Co-Authors: John Bailey JonesAbstract:Since 1983, Social Security Benefits have been subject to income taxation, a provision that can significantly increase the marginal income tax rate for older individuals. To assess the impact of this tax, we construct and calibrate a detailed life-cycle model of labor supply, saving, and Social Security claiming. We find that in a long-run stationary environment, replacing the taxation of Social Security Benefits with a revenue-equivalent change in the payroll tax would increase labor supply, consumption, and welfare. From an ex-ante perspective an equally desirable reform would be to make the portion of Benefits subject to income taxes completely independent of other income.
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The Effects of Collecting Income Taxes on Social Security Benefits, Working Paper 17-02
2017Co-Authors: John Bailey JonesAbstract:Since 1983, Social Security Benefits have been subject to income taxation, a provision that can significantly increase the marginal income tax rate for older individuals. To assess the impact of this tax, we construct and calibrate a detailed life-cycle model of labor supply, saving and Social Security claiming. We find that in a long-run stationary environment, replacing the taxation of Social Security Benefits with a revenue-equivalent increase in the payroll tax would significantly increase labor supply, consumption and welfare. From an ex-ante perspective an even more desirable reform would be to make the portion of Benefits subject to income taxes completely independent of other income.
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Can We Tax Social Security Benefits More Efficiently
Richmond Fed Economic Brief, 2017Co-Authors: Helen Fessenden, John Bailey JonesAbstract:Many seniors pay taxes on their Social Security Benefits due to a provision in the program's 1983 reform, under which the portion of Benefits that's taxable rises with total income. This tax structure can impose high marginal rates on seniors even if their other income sources are modest. These high marginal rates, in turn, can determine whether beneficiaries decide to keep working or retire. Research suggests that several policy alternatives are more likely to keep seniors in the workforce and to generate more revenue for the Social Security Trust Fund.
Steven H Sandell - One of the best experts on this subject based on the ideXlab platform.
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Cost-neutral policies to increase Social Security Benefits for widows: a simulation for 1992.
Social security bulletin, 1998Co-Authors: Howard M Iams, Steven H SandellAbstract:by Howard M. Iams and Steven H. Sandell* Among older women, widows are more likely to live in poverty than married women. Thus, increasing Social Security Benefits to widows seems desirable. Shifting some Social Security Benefits from the period when women live as part of a couple to the period when they are widows could reduce poverty. This article uses the 1991 Survey of Income and Program Participation exactly matched to the Social Security Administration's record of Benefits to evaluate the effect on poverty rates of four cost-neutral proposals that transfer Social Security Benefits from married couples to surviving widows. The policies would moderately decrease poverty rates among older women by reducing the rate for widows more than the slight increase in the rate for couples. The evaluated proposals include a proposal supported by the majority of the 1994-96 Advisory Council on Social Security that would calculate the survivor's benefit as 75 percent of the couple's benefit, reduce the spouse's benefit from 50 to 33 percent of the husband's benefit, and reduce Benefits by 1.5 percent. Poverty of the elderly mainly occurs among women who are not married, particularly widows. In 1992, less than 5 percent of married women aged 62 or older had family incomes below the poverty line, compared with nearly 20 percent of widows and over 20 percent of divorced, separated, and never married women (chart 1). About 60 percent of older women in poverty were widows (chart 2). Increasing the Social Security Benefits of widows would lower their poverty rates. Given the long-run fiscal pressures facing Social Security, increased Benefits should be financed without increasing program costs. A possible funding source would be to reduce Benefits of married women. One proposal is to finance higher widow Benefits by reducing spouse Benefits to single earner married couples (1994-96 Advisory Council on Social Security 1996; Burkhauser 1994). A supplementary benefit reduction to all beneficiaries may be required to fund the benefit increase. Another possibility is to transfer some of couples' lifetime Benefits from the period when women are beneficiary wives to the period when women live alone as widows (Warlick 1985; Steuerle and Bakija 1994; Sandell and Iams 1997). An actuarially fair arrangement implies that a $1 decrease in a couple's Benefits can finance about a $ 1.45 increase in the survivor's Benefits reflecting the longer life expectancy of survivors (usually the widow). This article evaluates the poverty effects of the four proposals considered by the Advisory Council to increase Social Security Benefits for widows, while financing it with benefit reductions concentrated on married couples. A majority of the 1994-96 Advisory Council on Social Security (1996) recommended one of the proposals-one that guarantees widows a benefit of 75 percent of the couples' total benefit. The recommended proposal would finance the increased generosity in the formula used to calculate Benefits as widows by reducing spouse Benefits to 33 percent from the 50 percent of the highest earner's benefit and slightly reducing Benefits of all beneficiaries. This article also examines the effects of the three other proposals that provide actuarially fair increases in widow Benefits financed by reducing Benefits of retired couples. The analysis uses the 1991 panel of the Survey of Income and Program Participation (SIPP) to generate estimates for calendar year 1992.1 The article is presented in five sections: The first section describes the nature of Social Security Benefits, the second section describes the four proposals, the third presents the empirical analysis with a discussion of methodology and results, the fourth section discusses conclusions, and the fifth section contains the technical appendix. I. Social Security Benefits Aged men and women usually receive Social Security current law Benefits either as retired workers, spouses, or widow(er)s. …
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reducing women s poverty by shifting Social Security Benefits from retired couples to widows
Journal of Policy Analysis and Management, 1997Co-Authors: Steven H Sandell, Howard M IamsAbstract:This article examines proposals to transfer Social Security Benefits from married couples to surviving widows in terms of effects on poverty rates, trust fund expenditures, and Supplemental Security Income (SSI) expenditures. Because widows are much more likely to be living in poverty than older married women, it makes sense to consider Social Security Benefits in a lifetime framework and transfer some Benefits from the time both the husband and wife are alive to the time when there is only one survivor, usually the wife. Because of expected life span and age differences of marital partners, a $1 reduction of the couple's benefit can finance a $1.45 increase in the widow's benefit. The 1990 Survey of Income and Program Participation (SIPP) matched to the Social Security Administration's benefit records are the basis for the estimates.
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Caregiving and Women's Social Security Benefits: A Comment on Kingson and O'Grady-LeShane
The Gerontologist, 1994Co-Authors: Steven H Sandell, Howard LamsAbstract:This article re-examines the effects of caregiving on women's Social Security Benefits using the New Beneficiary Survey. Total (husband and wife) Social Security Benefits to the family, rather than only the women's own Benefits, is the appropriate measure for married couples. We find family Benefits and family income to be invariant to the number of children. The reduction in own retirement Benefits associated with married women's raising children is made up by higher Benefits received by their husbands and higher spouse Benefits. Furthermore, adjusting Social Security Benefits for caregiving dropout years is not an efficient means to improve the economic well-being of poor elderly women.