Academic journal article Social Security Bulletin

Who Never Receives Social Security Benefits?

Academic journal article Social Security Bulletin

Who Never Receives Social Security Benefits?

Article excerpt

We estimate that about 4 percent of individuals aged 62-84 in 2010 will never receive Social Security benefits. This article describes the prevalence, demographic characteristics, and economic well-being of this group. The never-beneficiary population generally has lower education levels and higher proportions of women, Hispanics, immigrants, the never-married, and widows than the beneficiary population. Never-beneficiaries have a far higher poverty rate (about 44 percent) than current and future beneficiaries (about 4 percent). Ninety-five percent of never-beneficiaries are individuals whose earnings histories are insufficient to qualify for benefits. Late-arriving immigrants and infrequent workers comprise the vast majority of these insufficient earners. Late-arriving immigrants have a poverty rate of about 43 percent, and are particularly reliant on income from household coresidents. Infrequent workers have a poverty rate of about 57 percent, and are particularly reliant on Supplemental Security Income.

Selected Abbreviations

MINT Modeling Income in the Near Term

QC Quarter of coverage

SSI Supplemental Security Income

Summary

Social Security is often perceived as a universal program for the aged because of its wide reach. As of 2010, 85.6 percent of persons aged 65 or older were receiving income from Social Security, far surpassing the percentage receiving income from any other source.1 However, some aged individuals never receive Social Security Old-Age, Survivors, and Disability Insurance (OASDI) benefits. This article examines the prevalence, demographic characteristics, and economic well-being of these never-beneficiaries.

Few studies have specifically addressed never-beneficiaries, but the characteristics of this group are worth examining, particularly for policymakers and theorists concerned with the overall well-being of the aged. Proposals to reduce elderly poverty through a Social Security minimum benefit or other options targeting low-earning Social Security beneficiaries may be less effective than anticipated if never-beneficiaries remain ineligible for Social Security and beyond the reach of these initiatives.

We analyze never-beneficiaries using projections from the Modeling Income in the Near Term (MINT) microsimulation model, focusing on individuals aged 62 to 84 in 2010.2 One advantage of the MINT model is that it includes projections of beneficiary status after 2010, and allows us to project whether individuals aged 62 to 84 in 2010 will remain nonbeneficiaries for the rest of their lives. The major findings, briefly summarized here, are discussed in detail below:

* About 4 percent of the aged population never receives Social Security benefits. These never-beneficiaries include higher proportions of women, Hispanics, immigrants, the never-married, and the widowed than the beneficiary population; never-beneficiaries are also comparatively less educated.

* The never-beneficiary poverty rate is 44.3 percent, far higher than the 3.7 percent poverty rate among beneficiaries.

* Almost 95 percent of never-beneficiaries have insufficient work histories to gain Social Security coverage. Within this group we identify three mutually exclusive categories: late-arriving immigrants (55.1 percent), infrequent workers (34.7 percent), and noncovered workers, of whom most are state and local government employees (4.7 percent).

* The high poverty rate among never-beneficiaries is driven by late-arriving immigrants and infrequent workers, who have poverty rates of 43.2 percent and 57.2 percent, respectively. Noncovered workers have a poverty rate of 8.6 percent.

* As indicated by their high poverty rate, late-arriving immigrants and infrequent workers have little income from non-Social Security sources. Infrequent workers are more likely to receive Supplemental Security Income (SSI) than other groups, while late-arriving immigrants are more reliant on coresident income. …

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