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Abstract:
Policies that would reduce or eliminate Social Security benefits for early retirees could have adverse consequences for older workers in poor health. This Brief documents the health and financial status of people aged 62-64 who receive reduced Social Security benefits as retired workers, spouses, and widowed spouses. Although most of these early retirees do not have a serious health condition, almost half report some type of health problem. About 25 percent are estimated to have health problems that substantially impair their ability to work. When compared to other early retirees, those who have severe health problems have lower lifetime earnings, are more reliant on Social Security benefits, have fewer financial assets, and are less likely to have health insurance. About 12 percent of early retirees are estimated to meet the strict disability criteria for receiving Social Security Disability Insurance (DI) or Supplemental Security Income (SSI). Many of them do not receive DI because they lack sufficient work histories to qualify. Another larger subgroup does not meet the test of low income and limited financial assets for means-tested SSI disability benefits. About as many 62-64 year olds classified as severely disabled receive early retirement benefits as receive disability benefits from DI or SSI. The evidence suggests that Social Security early retirement benefits serve as a substantial, albeit unofficial, disability program for some early retirees.

Retirement, retirement age, social security, financial resources

Abstract:
We study Disability Insurance (DI) application behavior in the U.S. using a matched SIPP and administrative data over 1989-1995. Certain state-contingent earnings projections and eligibility probabilities are central to the analysis. We find evidence for a small work disincentive effect of DI that seems to be restricted to a subset of the DI beneficiaries, including low earning groups such as blue collar workers and those subject to economic dislocation. Processing time, Medicare value, unemployment, private health insurance, and health shocks are some of the major factors that affect application propensity. The behavioral response of female workers to various parameters of the DI program is found to be quite different from that of males.

Disability behavior, SIPP, Social Security

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