Disability Just Before Retirement Often Leads to Poverty

Abstract

A patchwork of public programs, including Social Security Disability Insurance, workers’ compensation, Supplemental Security Income, and veterans’ benefits, provides income supports to people with health problems who are unable to work. Yet, many Americans who develop disabilities in their fifties or early sixties fall into poverty. With millions of boomers entering their sixties—when work disability rates peak—it’s time to fix the social insurance safety net for disabled workers.

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Introduction

Record numbers of older men and women began collecting Social Security benefits in 2009. New awards surged last year partly because the age-62 population grew rapidly. More importantly, older Americans were much more likely to claim Social Security in 2009 than in recent previous years, probably because many seniors were unable to find work. Social Security benefits provide an important safety net for unemployed older adults, but early claimants receive permanently reduced benefits, threatening their future economic well-being.

• In 2009, 1.3 million men age 62 and older began collecting Social Security retirement benefits, 20 percent more than in 2008 and the most new awards received by men since Social Security began paying benefits in 1940.1 About 97 percent of new awards went to retired workers, who receive benefits based on their own earnings histories. The rest went to husbands of retired workers and widowers, who receive benefits based on their wives’ or deceased wives’ earnings.
• More older women than ever before also received new Social Security retirement benefit awards. In 2009, 1.9 million women age 62 and older began collecting Social Security retirement benefits. About 61 percent went to retired workers, 18 percent went to wives of retired workers, and 21 percent went to widows. Our estimates somewhat overstate the number of new female

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