Social Security

Independent Institute - Social Security Increases Poverty

One of the most common arguments supporting Social Security is that it reduces poverty among the elderly. Last week, Barack Obama stated that, “Social Security has lifted millions of seniors and their families out of poverty. Without it, nearly 50 percent of seniors would live below the poverty line.” This is almost certainly untrue.

Social Security affects poverty among the elderly in two offsetting ways. While it reduces poverty by providing income to retired persons, it discourages private saving during the working years—ultimately decreasing the private assets people bring to their retirement. The net effect of this is increased poverty among the retired population.