More About Kathy Ruffing

Kathy Ruffing

Kathy Ruffing is a Senior Fellow at the Center on Budget and Policy Priorities, specializing in federal budget issues.

Full bio and recent public appearances | Research archive at CBPP.org


Awaiting the 2014 Social Security Trustees’ Report

July 25, 2014 at 1:25 pm

Social Security’s trustees will release their annual review of the program’s finances on Monday, and while we’re not sure what the report will say, the trustees last year estimated that Social Security’s combined trust funds will be exhausted in 2033.  That was well within the range that the program’s trustees have projected in their reports for the past two decades (see table).

Even after the combined trust funds — the Old-Age and Survivors Insurance (OASI) trust fund and the Disability Insurance (DI) trust fund — are exhausted, Social Security could still pay about three-fourths of scheduled benefits using its tax income, which is a fact that news stories often overlook.

Fluctuations from year to year in the trustees’ long-term estimates are normal.  A variety of demographic factors (such as fertility, mortality, and immigration) and economic variables (including wage growth, inflation, and interest rates) affect Social Security, and the actuaries constantly improve their methods.

Because of these fluctuations, revisions of a year or two, in either direction, are not a cause for alarm (or for celebration).  In fact, the trustees caution that their projections are uncertain.  For example, last year they judged that there was an 80 percent probability that trust fund exhaustion would occur sometime between 2029 and 2039 — and a 95 percent chance that it’d happen between 2028 and 2044.  More recently, the Congressional Budget Office (CBO) estimated that exhaustion would occur in 2030, largely because CBO expects somewhat faster improvements in mortality.  In short, all reasonable estimates show a manageable long-run challenge that needs to be addressed but not an immediate crisis.

The new report will note that the DI trust fund, which is legally separate from the much larger OASI trust fund, will need to be replenished sooner.  (Last year the trustees forecast that would be necessary in calendar year 2016; CBO projects that it’ll be necessary early in fiscal year 2017, which begins in October 2016.)  Traditionally, Congress has reallocated tax rates between the OASI and DI funds to address such challenges.  That’s why analysts usually focus on the outlook for the combined trust funds.

Legislators should boost DI’s share of the payroll tax by 2016 to avert a harsh and unnecessary cut in benefits to its severely impaired recipients.  And policymakers should work on a balanced package of Social Security reforms that achieves overall long-term solvency while preserving and even strengthening the program’s vital role in protecting breadwinners and their families.

You can find our analysis of last year’s report here, and our other Social Security analyses here.

We’ll be back on Monday with our initial reaction to the new Social Security and Medicare reports.

SSI Should Be Strengthened, Not Cut

March 27, 2014 at 11:22 am

House Budget Committee Chairman Paul Ryan’s misleading review of the safety net attacks Supplemental Security Income (SSI) — an important program that provides cash income to seniors, the blind, and people with severe and long-lasting disabilities who have little income and few assets.  This vital program aids some of the poorest and most vulnerable Americans and, rather than attack it, policymakers should strengthen it.

In December 2013, 8.4 million people collected SSI:  2.1 million seniors age 65 or older, 4.9 million disabled adults age 18-64, and 1.3 million disabled children under age 18.  Until the deep recession caused a modest uptick, SSI participation had generally been flat or falling as a share of the population since at least the mid-1990s (see graph).

SSI benefits alone don’t lift recipients living independently out of poverty; the maximum benefits for individuals ($721 a month) and couples ($1,082, if both spouses qualify) are about three-fourths of the poverty level.  But SSI greatly reduces the number of people in extreme poverty and lessens the burden on other family members.  A Social Security Administration study found that, in 2010, the poverty rate (based on family income) of recipients would be 65 percent without counting SSI payments; the actual rate, including SSI, was 43 percent.  Most families with an SSI recipient remained below 150 percent of the poverty threshold.  SSI benefits fall when recipients have other income (or live in a Medicaid facility or with relatives who provide support), so the average payment is just $529 a month.

Because SSI participants are elderly or have severe disabilities, it’s no surprise that relatively few of them work, even though program rules allow and encourage them to do so.  Nevertheless, nearly one-third of SSI recipients age 18-64, and three-fifths of elderly beneficiaries 65 or older, have worked enough — at least one-fourth of their adult lives — to qualify for Social Security benefits.  And two-thirds of children with disabilities who receive SSI and live in two-parent families — and one-third of those in single-parent families — have a working parent.

Severe disability in childhood — exacerbated by poverty — hampers adult outcomes (see here, here, and here), and about two-thirds of child beneficiaries reaching age 18 continue to qualify for SSI based on disability.  It’s not appropriate, as Ryan’s report implicitly does, to compare statistics like high school graduation rates and job-holding for young people who received SSI as children with statistics for those who didn’t.  The two groups differ in fundamental ways.  Similarly, there’s no basis for calling the adult struggles of those who received SSI as children an “effect” of their benefit receipt, as Ryan does.  Their underlying health problems coupled with their low incomes play an important role in their academic achievement and adult employment prospects, and at least one study suggests that childhood SSI benefits improve adult outcomes.

Special SSI program rules — like the Student Earned Income Exclusion — are designed to encourage a successful transition to adulthood for child beneficiaries, and the agency is rigorously testing even more targeted efforts.  Early results are mixed, but if the pilots are successful, such interventions would require more funding, not less, for this special group of young adults.

Just the Facts on Disability Insurance

March 17, 2014 at 2:29 pm

We’ve updated our primer on the Social Security Disability Insurance (DI) program, an integral part of Social Security that provides modest but vital benefits to workers who can no longer support themselves due to a severe and long-lasting medical impairment.  For an estimated 150 million insured workers, DI stands ready to protect them from destitution if a health catastrophe strikes and they meet DI’s stringent eligibility criteria.

Some highlights from our piece:

  • Some 8.9 million people received disabled-worker benefits from Social Security in December 2013, averaging $1,146 a month.
  • The typical beneficiary is in his or her late 50s or early 60s, with limited education and poor health.  Recipients’ death rates are at least three times as high as the general population’s.
  • Most recipients depend heavily on their DI benefits as their main source of income.  Beneficiaries are much likelier to be poor or near-poor than people who don’t collect DI.

DI rolls have risen steeply over the last few decades, chiefly because of demographic factors — overall population growth, the aging of the baby boomers into their 50s and 60s (the peak ages for DI receipt), the rise in women’s labor force participation (which means more women now qualify for DI benefits), and the rise in Social Security’s full retirement age from 65 to 66 (which delays by a year the reclassification of DI beneficiaries as retired workers).  Once you adjust for those factors, DI’s rate of receipt has grown modestly (see graph).

Find our primer here and check out our other posts on this important topic.

Decoding Demographics’ Role in Disability Program’s Growth

January 30, 2014 at 10:21 am

The number of disabled workers collecting Disability Insurance (DI) benefits tripled from 2.9 million in 1980 to 8.9 million the end of 2013.  Some see this growth as evidence that the program is out of control.  But most of that growth stems from five demographic factors, as our new paper explains:

  • Population growth.  The working-age population (conventionally defined as people aged 20 through 64) rose by 43 percent since 1980.  That increase, alone, would have generated an extra 1.25 million DI beneficiaries in 2013, compared with 1980.
  • Population aging.  The risk of disability rises steeply with age; people are twice as likely to receive DI at age 50 than at age 40, and twice as likely at age 60 than at age 50.  The baby-boom generation — the large cohort born between 1946 and 1964 — has aged into those high-risk years over the past few decades (see graph).  That added another 900,000 DI beneficiaries in 2013, compared with 1980.
  • Growth in women’s labor force participation.  Besides having a severe impairment, DI applicants must have a steady work history — and until women joined the work force in huge numbers, relatively few of them qualified.  The rise in women’s labor force participation explains why the number of insured workers grew much faster than overall population, especially among older workers.  It’s responsible for another 900,000 beneficiaries in 2013, compared with 1980.
  • Rise in retirement age.  When disabled workers reach Social Security’s full retirement age, they begin receiving Social Security retirement benefits rather than DI.  The rise in the full retirement age from 65 to 66 in the early 2000s delayed the conversion of disabled workers to retired workers.  In December 2013 more than 450,000 people between ages 65 and 66 collected DI benefits; under the former rules, they would’ve received retirement benefits instead.
  • Increase in women’s rate of receipt.  Until the mid-1990s, women who had worked enough to qualify for DI in the event of disability were only about three-fourths as likely as their male counterparts to receive DI benefits.  Now they’re equally likely to do so.  This development added another 650,000 beneficiaries in 2013, compared with 1980.

In sum, these five demographic factors alone account for over 4.1 million more DI beneficiaries by 2013 — expanding the DI rolls from 1980’s 2.9 million to 7 million.  Put another way, these five factors account for nearly 70 percent of DI’s enrollment growth since 1980 and four-fifths of DI’s total enrollment in 2013.

And we know many of the reasons for the remaining growth (which include changes to eligibility rules in the mid-1980s, the impact on the workplace of globalization and technological change, and lower death rates), even though we can’t readily quantify them.

A proper understanding of the contribution of demographic changes and other factors should help policymakers as they decide how to ensure Disability Insurance’s long-term solvency.

Social Security Benefits Are Modest by International Standards

December 4, 2013 at 2:30 pm

We’ve long emphasized that Social Security benefits are modest, averaging less than $1,300 a month (about $15,000 a year) for retirees and elderly widows.  They’re also low in relation to earnings, replacing just 41 percent of the median retiree’s earnings, according to the Organisation for Economic Co-operation and Development’s (OECD) latest biennial update.  That puts us in 31st place among the 34 OECD member countries.  (See graph.)

That’s nothing new.  Although the rankings shift a bit from year to year, the United States has consistently appeared near the bottom by this measure.

Recent austerity measures in other countries still leave their benefits well above U.S. levels, in most cases.  Greece and Iceland, for example — which topped the rankings in 2011 and 2009 — have slipped several notches but remain far more generous than the United States.

Social Security already has a number of money-saving features that European nations are emulating, such as an early-retirement age that’s higher than many other countries’ (62), lower benefits for people who take early retirement, a high and rising age for full benefits (66, soon to be 67), and a bonus for people who delay retirement.

U.S. seniors are also much more likely to work than their peers in most other developed countries, as we’ve noted.

The moral?  Our seniors already work harder and get lower benefits than their counterparts in most other rich countries.  So imposing big benefit cuts on ordinary seniors would be the wrong way to restore solvency to this popular and essential program.