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The Social Security Program You Don’t Know
posted 07.06.2016

By Tracey Gronniger

For many, Social Security means that the middle-class worker at the end of his or her career can retire comfortably with a monthly income determined by the taxes they paid into the system. But what about those in poverty who are not eligible for Social Security, or those who receive so little in Social Security benefits that they are still impoverished?

These are the people who worked for very low wages and, consequently, have minimal benefits. They are the teachers who were not covered by Social Security because of state pension coverage that, for a variety of reasons, did not materialize, or has been so slashed as to be insufficient to live on. They are the day laborers, housekeepers, nannies and others who worked hard their whole lives but were paid “off the books.” They are the divorced women and men who receive lower benefits because they took primary care of their households while their spouses worked outside the home. How do these people make ends meet as they age out of the workforce?

Supplemental Security Income Seeks to Bridge the Gap

Administered by the Social Security Administration, Supplemental Security Income (SSI) is a safety net program that provides a monthly benefit to older adults and people with disabilities who have little to no income. Approximately 8.4 million Americans, 2.1 million of whom are age 65 or older, rely on SSI benefits to meet basic needs including rent, food, transportation, utilities, healthcare co-payments and other expenses. People do not need to pay into SSI to receive benefitsfrom it; SSI is funded from general tax revenue rather than Social Security payroll taxes.

SSI is an important source of income for millions of people, yet it is not widely known about or understood. And, there is another little-known fact: Despite the important assistance it provides, today’s SSI benefits have not kept pace with the rising cost of living. Many individuals, including millions of elders, live in poverty even while receiving SSI benefits.

We see this situation even in states that provide a small supplement to the $733 maximum monthly federal benefit. In California, for instance, although the maximum SSI benefit is $889 per month, the average monthly rent for a one-bedroom apartment, according to the Elder Economic Security Index, is $882. And, according to the California Budget & Policy Center, “Fair Market Rent” for a studio apartment exceeds half of the current SSI/SSP (State Supplementary Payment) amount in all 58 California counties and exceeds the entire SSI/SSP amount in 16 counties.

Even for those able to find cheaper housing, this leaves almost nothing to cover the costs of living (such as food and medicine), or to put aside in case of emergencies. And many are paying too large a proportion of their income for rent, putting them at greater risk of homelessness. Homeless older adults have difficulty accessing healthcare and other benefits, suffer poor health outcomes, hunger, higher rates of chronic illness and die much younger than older people who are housed, according to Brown, et al., in The Gerontologist.

SSI Rules and Eligibility Requirements Keep Poor People on Brink of Disaster

The original intent of SSI was to keep older adults out of abject poverty, but the program’s outdated rules and restrictions cause harm to those in need. Under the current program, elders who receive money or assistance from other sources that might supplement their SSI income do not get the benefit of that income. Instead, they see a decrease in their SSI benefits. This is because SSI has strict income limits based on unrealistic and decades-old assumptions that have not been increased to reflect the rising cost of living.

Under the program, beneficiaries are only allowed to receive up to $20 in unearned income before their benefits are decreased (unearned income includes money from nonwage sources such as pensions, Social Security or cash from family or friends). Any unearned income an older adult receives over $20 (with some exceptions) means a dollar-for-dollar reduction in his or her SSI benefits. A person who receives $450 per month in Social Security payments would lose $430 from their SSI payment, decreasing their SSI benefits to $303 per month. This is absurd in a country where the cost of living today is more than five and a half times what it was in 1972 when President Nixon signed the SSI program into law. That $20 unearned income today would have been worth only about $3 in 1972.

To make matters worse, recipients who attempt to improve their circumstances by saving money or earning a meager income are penalized. Those who put money aside for emergencies—occurrences such as urgent home repairs or car troubles, which might propel them into an even more difficult situation—are faced with losing their benefits if they save too much. In fact, if they have resources worth more than $2,000 (not including their home or car), they are no longer eligible for SSI. And those who try to supplement SSI with earned income are hit with a decrease in their benefits, calculated at $1 in lost SSI benefits for every $2 earned for any pay they receive over $65. SSI also reduces benefits of those recipients who try to save by living in another person’s household. Penalizing elders who try to pull themselves out of poverty makes no sense when, at $733, the individual SSI federal benefit puts a person at just 75 percent of the federal poverty level. This amount often falls far short of the income older adults and people with disabilities require to meet basic needs.

How Can We Update SSI to Support Impoverished Elders?

We must update SSI to restore it to its original intent—protecting elders and people with disabilities from the harms and injustices of poverty. We can begin by supporting the passage of the Supplemental Security Income Restoration Act of 2015, which was introduced on May 19, 2015, in the Senate by Senator Sherrod Brown (D–OH) as S. 1387, and in the House as HR 2442 by Rep. Raul Grijalva (D–AZ); S. 1387 has 12 senators as co-sponsors and HR 2442 has support from 36 representatives as co-sponsors.

Under the Act, individuals will receive up to $112 per month of unearned income from other sources, such as Social Security benefits or pension payments, without a corresponding loss in SSI benefits. They also will be able to earn up to $364 per month before the $1 for $2 deduction begins. Individuals who live in households with others will no longer be penalized with lower benefits, and they will be able to save up to $10,000 ($15,000 for couples) without losing benefits.

While these changes may seem small, they will do a great deal to bring the SSI program back to its original purpose, and will give people with little or no income a chance to meet their basic needs. If nothing is done, we will have an estimated 25 million older adults living in poverty by 2050.

Tracey Gronniger is the directing attorney for the Economic Security team at Justice in Aging, a national organization with offices in Washington, D.C., Los Angeles and Oakland, Calif.

Editor’s Note: This article appears in the July/August 2016 issue of Aging Today, ASA’s bi-monthly newspaper covering issues in aging research, practice and policy. ASA members receive Aging Today as a member benefit; non-members may purchase subscriptions at our online store or Join ASA.

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