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Abstract:
The federal benefit rate (FBR) of the Supplemental Security Income program provides an inflation-indexed income guarantee for aged and disabled people with low assets. Some consider the FBR an attractive measure of Social Security benefit adequacy. Others propose the FBR as an administratively simple, well-targeted minimum Social Security benefit. However, these claims have not been empirically tested. Using microdata from the Survey of Income and Program Participation, this article finds the FBR an imprecise measure of benefit adequacy; it incorrectly identifies as economically vulnerable many who are not poor, and disregards some who are poor. The reason for this is that the FBR-level benefit threshold of adequacy considers the Social Security benefit in isolation and ignores the family consumption unit. The FBR would provide an administratively simple but poorly targeted foundation for a minimum Social Security benefit. The empirical estimates quantify the substantial tradeoffs between administrative simplicity and target effectiveness.

Social Security, minimum benefit, target efficiency, Supplemental Security Income (SSI), poverty, retired workers, benefit adequacy, administrative complexity, Survey of Income and Program Participation (SIPP)

Abstract:
The Supplemental Security Income (SSI) program pays benefits to needy aged, blind, or disabled individuals. Policies for both living arrangements and in-kind support and maintenance (ISM) are intended to direct program benefits toward persons with the least income and support, by reducing benefits for recipients living in another person's household or receiving food or shelter in kind. However, these policies are cumbersome to administer and, in some cases, poorly targeted. Benefit restructuring would simplify the SSI program by replacing ISM-related benefit reductions with benefit reductions for recipients living with another adult, thus encouraging food and housing contributions to SSI recipients. However, our simulation of the most basic benefit restructuring option shows that the initial per capita household incomes of those with benefit increases are, on average, 42 percent higher than the incomes of those with reductions - an outcome that is at odds with the basic rationale of any means-tested program.

SSI, Microsimulation, in-kind support