Social Security:

Options to Protect Benefits for Vulnerable Groups When Addressing Program Solvency

GAO-10-101R: Published: Dec 7, 2009. Publicly Released: Dec 7, 2009.

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Charles A. Jeszeck
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For over 70 years, Social Security has been the foundation of retirement income for American workers and their families and has been instrumental in reducing poverty among the elderly. The Congressional Research Service estimates that if Social Security benefits did not exist, an estimated 44 percent of all elderly people would be poor today. Still, some people who receive Social Security retirement benefits remain vulnerable to poverty in old age. The elderly poverty rate in 2007 was 9.7 percent. In addition, the long-term financing shortfall currently facing the Social Security program is growing and has made reform of the program a priority for policy makers. Thus, the nation faces the challenge of improving long-term program solvency, while also ensuring benefit adequacy for economically vulnerable beneficiaries. Many Social Security reform proposals have suggested modifying the system to restore its financial balance by reducing benefits or increasing payroll or other taxes, and several also include options to address concerns about benefit adequacy for economically vulnerable groups of beneficiaries. Economically vulnerable beneficiaries generally have limited income from other sources, such as employer-sponsored pension plans or personal savings, and therefore depend heavily on their Social Security benefits. Because they have limited resources, many of those beneficiaries also receive assistance from other programs for low-income individuals, including Supplemental Security Income (SSI); Medicaid; and the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program; among others. This report addresses the following key questions: (1) What are the options for modifying Social Security benefits to address concerns about benefit adequacy and retirement income security for economically vulnerable groups?; and (2) What effects could these options have on benefits those groups receive from SSI, Medicaid, and SNAP?

Various Social Security reform proposals include options intended to address concerns about benefit adequacy for vulnerable groups: (1) Guaranteeing a Minimum Benefit; (2) Reducing Work Requirements for Eligibility; (3) Supplementing Benefits for Low-income Single Workers; (4) Adopting Earnings Sharing; (5) Reducing the Marriage Duration Required for Spousal Benefits; (6) Providing Caregiver Credits; (7) Increasing Survivor Benefits; and (8) Providing Longevity Insurance. Many Social Security retirement beneficiaries receive benefits from other federal programs. Nine percent of Social Security beneficiaries age 65 or older, or more than 2.7 million people, also receive SSI, Medicaid, or SNAP benefits. Increasing Social Security benefits to address concerns about adequacy for vulnerable groups of beneficiaries could result in a decline in benefits from these other programs. In fact, some beneficiaries could lose eligibility for benefits from the other programs altogether. On the other hand, some beneficiaries may not be affected because their incomes, even with increased Social Security benefits, would stay within the other programs' eligibility limits.

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