NCPA - National Center for Policy Analysis

Escaping Poverty Without Social Security

June 25, 1999

Defenders of Social Security point out that without it, nearly four million more older Americans would have been counted as poor during 1997.

But analysts say that living above the official poverty income level in retirement years is not all that difficult -- even for those with low incomes during their working years. All an elderly person had to earn in 1997 to be above the poverty threshold for persons 65 or older was $7,698.

  • To receive that amount of income, all an elderly person had to have at age 67 is $192,450 in government bonds -- assuming current interest rates and that the individual's net worth is protected from the erosion of inflation.
  • To achieve that sum, all a person had to save and invest from age 22 was an average of $347 a year -- ranging from $195 beginning 45 years ago to $498 last year.
  • This means that even low-skilled, minimum wage workers would have to save only 4.6 percent of their incomes.
  • Workers earning the median American wage would have to save less than 2 percent of their income -- equivalent to nine minutes' work a day.

The problem is that the typical elderly person only had about $106,000 in net worth in 1996 -- the latest year for which data is available.

Without doubt, many of today's elderly went through their productive years without saving enough, seduced by the prospect that Social Security would provide amply at retirement.

Source: Richard B. McKenzie and Dwight R. Lee (authors), "Why Some of the Elderly Are Poor," Investor's Business Daily, June 25, 1999.


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