Social Security, signed into law 90 years ago by President Franklin Roosevelt, is the financial foundation of retirement in America. But it’s not just those getting to retire who benefit from Social Security. In the past two decades, almost twice as many children live with at least one adult 62 years of age or older. And that means Social Security payments are making a difference for more children.
Chris Farrell, Marketplace’s senior economics contributor, has been looking into this. He spoke with “Marketplace Morning Report” host David Brancaccio, and the following is an edited transcript of their conversation.
David Brancaccio: All right, so we have this data: more children living with older adults who are drawing Social Security. Household income being fungible. What’s behind this?
Chris Farrell: The numbers are really compelling, David. The fraction of children under 18 living in households with any exposure to Social Security income — it’s risen from 6.8% in 2000 to 9.1% in 2019. So that’s an increase of about one-third in two decades. And there are a number of factors that are behind the growth in “grandfamilies,” or kinship families, where grandparents are the primary caregivers. Among the most important: substance abuse, incarceration, financial hardship, military deployment, illness and death.
Brancaccio: So the money comes in for the household expenses, and it kind of gets all mixed up. So you have this kind of Social Security subsidy for younger people as well.
Farrell: That’s right. So the estimates are about 50% of retirement-age people live in households receiving at least half of their family income from Social Security. You can file for benefits as early as age 62 and this recent study by several economists, they focus on children under age 18 who are living with grandparents, with the oldest adult around that age of 62. And what they find, Social Security has a meaningful and positive impact on the economic circumstances of children and grandfamilies. Now, Social Security doesn’t increase household income on average, probably because the older adults are retired or they’re semi-retired. But the payments are associated with less risk to children who live in deep poverty. The economists also point out that older adults receiving Social Security have more time available to them to spend with their grandchildren, which is good for their cognitive development and educational attainment.
Brancaccio: It’s been studied and shown that the poverty rate among the elderly has plunged because of Social Security. Can we say the same thing for the children that are benefiting?
Farrell: I think so. So their study echoes data from a recent Census Bureau report, which suggests that 1.4 million fewer children were in poverty in 2023 because of Social Security payments. And here’s the number that really took me by surprise, David: as of 2019, children are more likely to live in a household receiving Social Security income than one receiving traditional cash welfare.
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