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The Supplemental Security Income Program and Incentives to Claim Social Security Retirement Early

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  • Powers, Elizabeth T.
  • Neumark, David

Abstract

Features of the Supplemental Security Income (SSI) program and the social security retirement system interact to create incentives for prospective participants in the aged portion of SSI to withdraw from the labor force and make an early old age insurance (OAI) claim under social security. This paper takes a first close look at this SSI–OAI interaction. We first review the incentives to take early OAI posed by SSI rules in a basic theoretical framework. The impact of SSI rules on the financial cost of delaying the initial OAI claim is quantified using the earnings profiles of actual SSI recipients from Social Security Administration records. We then examine whether patterns of first SSI claims and early OAI claims of SSI–aged participants are consistent with the incentives identified. Finally, regression tests of behavior consistent with the predictions of the theory are implemented. The evidence from these various approaches generally points to behavior that makes the SSI–OAI interaction plausible and potentially important, and that is consistent with predicted responses to the incentives for early retirement in social security created by the interactions of SSI and OAI. Throughout, the analyses are enhanced by access to Social Security Administration records that have been matched to individuals in the Surveys of Income and Program Participation.

Suggested Citation

  • Powers, Elizabeth T. & Neumark, David, 2005. "The Supplemental Security Income Program and Incentives to Claim Social Security Retirement Early," National Tax Journal, National Tax Association;National Tax Journal, vol. 58(1), pages 5-26, March.
    • Handle: RePEc:ntj:journl:v:58:y:2005:i:1:p:5-26
    DOI: 10.17310/ntj.2005.1.01
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    Cited by:

    1. Mark Duggan & Melissa S. Kearney & Stephanie Rennane, 2015. "The Supplemental Security Income (SSI) Program," NBER Working Papers 21209, National Bureau of Economic Research, Inc.
    2. Neumark, David & Powers, Elizabeth T., 2005. "SSI, Labor Supply, and Migration," IZA Discussion Papers 1820, Institute of Labor Economics (IZA).
    3. Todd Elder & Elizabeth Powers, 2007. "A Longitudinal Analysis of Entries and Exits of the Low-Income Elderly to and from the Supplemental Security Income Program," Working Papers wp156, University of Michigan, Michigan Retirement Research Center.
    4. Oskari Juurikkala, 2008. "Punishing The Poor: A Critique Of Means‐Tested Retirement Benefits," Economic Affairs, Wiley Blackwell, vol. 28(1), pages 11-16, March.
    5. Burns, Marguerite & Dague, Laura, 2017. "The effect of expanding Medicaid eligibility on Supplemental Security Income program participation," Journal of Public Economics, Elsevier, vol. 149(C), pages 20-34.
    6. Mark Duggan & Melissa S. Kearney & Stephanie Rennane, 2015. "The Supplemental Security Income Program," NBER Chapters, in: Economics of Means-Tested Transfer Programs in the United States, Volume 2, pages 1-58, National Bureau of Economic Research, Inc.

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