November 12, 2019
From Disability to Low Retirement Income
By their early 60s, four out of five workers have chronic health problems. One in four has developed some type of physical or cognitive limitation.
If these problems force them to stop working, they can apply to Social Security for disability. But developing a disability late in a career still has long-term financial consequences. These workers not only give up their steady paychecks. Their preparations for retirement are also derailed at a critical time.
A 2018 study in the Journal of Disability and Policy Studies quantifies the financial fallout. Four groups were compared, each ranging in age from 67 to 69. One started receiving disability benefits sometime between 58 and 62. A second group went on disability between 62 and Social Security’s full retirement age, which is 66 for most boomers. The other two groups claimed their regular retirement benefits. One signed up between the earliest age allowed – 62 – and the full retirement age, and one started their benefits after the full retirement age, which yields a larger monthly check.
Where each of the four groups falls in a ranking of retirement incomes is easy to predict: the earlier a worker starts disability benefits, the less income he’ll have. Healthy retirees, on the other hand, enjoy big rewards from continuing to work, saving in a 401(k), accruing pension credits, and delaying Social Security.
Household income for the last group to retire was $76,000 per year at ages 67 to 69, with Social Security providing only about a third of it, according to researchers at Mathematica who conducted the study for the Disability Research Consortium. Households that claimed a retirement benefit between 62 and the full retirement age had $48,000 in income, with 45 percent supplied by Social Security.
The retirees who had been on disability were far worse off in their late 60s. If they started receiving the benefits between 62 and their full retirement age, they had only $36,000 in household income in their late 60s – not even half the income of the late retirees. Social Security retirement benefits were the largest source of income, supplying two-thirds of it. …Learn More
October 31, 2019
Boomers at 80: Housing Issues to Grow
The baby boom generation is continuing to work its way up the age ladder. The number of Americans over 80 will more than double to nearly 18 million over the next two decades.
And that’s partly because baby boomers are healthier and are living longer – they are also enjoying more of their retirement years free of disability than previous generations. But unfortunately, boomers can’t avoid the inevitability of their growing vulnerabilities and the impact this will have on their day-to-day lives. A new report by Harvard’s Joint Center for Housing Studies makes some sobering predictions about the issues the oldest retirees can expect to face in the future, from widening income inequality to more people living alone and in isolation.
The findings, taken together, point to a range of potential trouble spots revolving around housing our aging population.
- As people get old, their spouses die, their bank accounts dwindle, and their rents keep rising. For these and other reasons, housing creates more of a cost burden at 80 than at 65. The Harvard housing center defines someone as cost-burdened if they spend more than 30 percent of their income on housing. Today, nearly 60 percent of households over 80 fit this definition, and their absolute numbers will increase as more baby boomers reach that age. One place the financial strain shows up is food budgets: retirees who spend disproportionate amounts on housing spend half as much on food as people whose housing costs are under control. …
October 1, 2019
Financial Survival of Low-Income Disabled
A monthly disability check from the federal government is a lifeline for poor and low-income persons with disabilities, but they still face a daily struggle to meet their basic needs and cover their expenses.
In in-depth interviews, 35 low-income people in Worcester, Massachusetts, described how they make ends meet on the disability benefit they get from Social Security, which averages $912 a month and is their largest source of income. Another $300 comes from other forms of public assistance, family support, or minimum-wage jobs, according to a new issue brief by Mathematica’s Center for Studying Disability Policy.
The daily struggles that each individual faces are as unique as they are. Here are a few excerpts from the study:
“My rent is subsidized. Plus I work 20 hours a week which is pretty good. I bring home more than one hundred something dollars a week and I get a few dollars in food stamps. So it’s okay.”
“I’m stringing it, managing it, and just barely staying above water. I’ve been treading that water for a long time.”
“My situation is challenging. I sometimes just don’t have enough coming in to make what’s going out.”
Three out of four people in the study told interviewers that they find it very difficult to pay for their housing, food and other basic expenses. A bright spot is that people on federal disability insurance (DI) are also covered by Medicare and/or Medicaid and spend very little on medical care. “I’m getting everything I need,” one individual said about her healthcare. …Learn More
September 10, 2019
Medicaid for Children Pays Off Later
Medicaid health insurance, which covers a third of the nation’s children, has a payoff down the line: fewer adults on disability.
A well-known benefit of Medicaid is that low-income children covered under the insurance program turn into healthier adults. But a recent study found that these health improvements translate to another positive outcome for adults: fewer applications to Social Security’s Disability Insurance (SSDI) program, which provides monthly cash benefits to people who are not healthy enough to work.
The study, conducted by researchers at Middlebury College and Vanderbilt University, used U.S. Census data to follow 63,000 individuals between ages 25 and 64 who were exposed to Medicaid for various lengths of time during childhood, depending on when they were born and when their state first implemented the program, which Congress passed in 1965.
First, the study confirmed the health benefits of Medicaid coverage for children: the adults in the study could more easily pass a few basic tests of health and physical stamina, such as lifting 10 pounds, standing for an hour, and walking up 10 stairs.
And better health did, indeed, reduce their applications for SSDI – and ultimately, the number of adults receiving disability benefits. In fact, the longer they would have been insured under Medicaid as children, the less likely they were to apply for disability, said the study, which was for NBER’s Retirement and Disability Research Center.
This is a clear example of how early intervention can reduce government spending down the road. …Learn More
August 13, 2019
Fewer Contingent Workers Seek SSDI
The vast majority of so-called contingent workers – think Lyft drivers, AirBnB hosts, independent contractors, consultants, and freelancers – have built up the work history necessary to apply for federal disability benefits if they become injured.
The 86 percent coverage rate for contingent workers in their 50s and early 60s is less than the 92 percent for regular workers – but not by much.
Despite their relatively high rates of eligibility, however, older contingent workers are significantly less likely to end up on Social Security Disability Insurance (SSDI) than similar workers in traditional jobs, according to a new study by the Center for Retirement Research.
This finding is mainly driven by contingent workers’ lower application rates for SSDI. Applications are lower even for people with the physical, cognitive or emotional conditions that the government explicitly lists as SSDI-eligible.
“Even the contingent workers who need SSDI the most are less likely to apply for and be awarded benefits,” the researchers said.
They offer a couple reasons for the lower application rates. One reason might be that contingent workers would get less in their disability checks than workers with traditional jobs receive, because the benefits are based on earnings – and contingent workers earn an average $592 per month less than other workers.
A more compelling explanation is that they simply lack access to the natural avenues for learning about the program’s existence and their potential eligibility: unions, fellow employees, and a traditional employment arrangement. For example, private-sector employers often require people on their payrolls to apply for federal SSDI before receiving the company’s disability coverage. Contingent workers outside of this kind of arrangement are rarely covered by any employee benefits, let alone private disability insurance. …Learn More
July 16, 2019
Spotlight on Our Research, Aug. 1-2
Topics for this year’s Retirement and Disability Research Consortium meeting include the opioid crisis, retirement wealth inequality over several decades, trends in Social Security’s disability program, and the impacts of payday loans, college debt, and mortgages on household finances.
Researchers from around the country will present their findings at the annual meeting in Washington, D.C. Anyone with an interest in retirement and disability policy is welcome. Registration will be open through Monday, July 29. For those unable to attend, the event will be live-streamed. The agenda lists all of the studies.
Here are a few:
- Why are 401(k)/IRA Balances Substantially Below Potential?
- The Impacts of Payday Loan Use on the Financial Well-being of OASDI and SSI Beneficiaries
- The Causes and Consequences of State Variation in Healthcare Spending for Individuals with Disabilities
- Forecasting Survival by Socioeconomic Status and Implications for Social Security Benefits
- What is the Extent of Opioid Use among Disability Applicants? …
April 23, 2019
Boomers with Disabilities Often Retire
One in four workers in their mid-50s will eventually encounter difficulties on the job, because their bodies start breaking down or they aren’t as sharp as they used to be.
When a new, disabling condition is long-lasting, 63-year-olds – still a young age to be retiring – are two times more likely to stop working than other people their age, according to a new study by Mathematica, a Princeton, N.J., research firm.
The researchers started out with a fairly healthy group of 55-year-olds and followed their career paths through age 67. Strikingly, even people as young as 59 who have experienced a new work-limiting health condition leave the labor force at a much higher rate than those who did not. It’s inevitable that many, though not all, of the oldest workers in this group decide to retire, rather than find a new job.
Of course, the nature of the work factors into whether someone decides they have to retire. When older workers have physically demanding jobs, they are more likely to report a new disabling condition, the study found. It can be extremely difficult to soldier on in occupations such as construction or heavy industry.
With less physical jobs, however, it is more feasible to work longer even with a disability. For example, a lawyer or administrative assistant could conceivably keep working, even if it became difficult to walk.
In addition to the physical challenges, disability couldn’t come at a worse time financially for baby boomers, a significant minority of whom are not well-prepared for retirement.
They would benefit from staying in the labor force as long as possible to save more and hold out for a larger Social Security check every month. …Learn More