Modernizing Social Security: Minimum Benefits

Social Security offers a minimum benefit to retired workers with very low career earnings. However, the current level of this benefit is not enough, by itself, to prevent poverty even for full-career workers, and it is withering away due to a design flaw. As a result, many policy experts support redesigning the minimum benefit. Virtually all experts agree that full-career workers should get a benefit that keeps them out of poverty. Some also support broadening eligibility for the minimum benefit by reducing the earnings level needed to build up qualifying credits. Others would take the opposite tack, narrowing eligibility by raising the number of years needed for a full or partial benefit. This brief is the final one in a series on modernizing Social Security to account for changing social, economic, and demographic circumstances. The discussion proceeds as follows. The first section provides the basics on Social Security benefits for low earners. The second section introduces the key design elements of the current minimum benefit. The third section reviews several reform proposals. The fourth section assesses the reforms based on three criteria: targeting efficiency, administrative feasibility, and cost offsets. The final section concludes that an enhanced minimum benefit has wide appeal and could substantially reduce poverty risk, with the breadth of the impact dependent on how eligibility is determined.