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March 13, 2012
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Retirement
The federal government devotes a substantial share of its budget to benefits for the nation's retirees through Social Security, Medicare, Medicaid, and other programs. Additionally, the exclusion of pension contributions and earnings from taxable income constitutes one of the largest preferences in the federal income tax code. CBO regularly analyzes a wide range of proposals to change those programs or those elements of the tax code.
Health Insurance Exchanges - March 2012 Baseline
Medicare - March 2012 Baseline
Social Security Disability Insurance - March 2012 Baseline
Social Security Old-Age and Survivors Insurance - March 2012 Baseline
H.R. 452, the Medicare Decisions Accountability Act of 2011
H.R. 452, Medicare Decisions Accountability Act of 2011
The Earned Income Tax Credit and Expected Social Security Retirement Benefits Among Low-Income Women: Working Paper 2012-6
Abstract
Expansions in the Earned Income Tax Credit (EITC) are associated with increases in formal employment and increases in long-term year-over-year growth in earnings for single mothers. In this study, we examine whether expansions in the EITC are likely to lead to increases in Social Security retirement benefits for less-educated women (those likely to be affected by the EITC) by increasing their employment and earnings when young.
The increases in benefits could occur through two channels: First, as the EITC pulls additional less-educated women into market work, those women may accrue more quarters of employment and thus be more likely to qualify for Social Security retirement benefits. Second, to the extent that the EITC leads to increased earnings growth, less-educated women may qualify for higher benefits.
We rely on administrative earnings data from the Social Security Administration and existing estimates of the effect of the EITC on employment and earnings growth to simulate the impact of an EITC expansion on the future Social Security retirement benefits of less-educated women. The results of this simulation suggest that the EITC leads to an increase in the share of less-educated women that will be eligible for Social Security retirement benefits and leads to an increase in their monthly benefit amount. Thus, the existence of the EITC contributes to the financial security of affected women as they age and retire.