The Poverty-Reduction Effects of Social Security
Evidence from the 2025 CPS ASEC
Overview
This project estimates how much Social Security reduces poverty in the United States using microdata from the 2025 Current Population Survey Annual Social and Economic Supplement (CPS ASEC). I compare observed poverty outcomes with a counterfactual scenario in which Social Security income is removed and poverty is recalculated.
The analysis is carried out under both the Official Poverty Measure (OPM) and the Supplemental Poverty Measure (SPM) to show how the program affects poverty under two major frameworks.
Data & Method
- Dataset: 2025 CPS ASEC microdata from IPUMS CPS
- Income year analyzed: 2024
- Frameworks: OPM and SPM
- Method: counterfactual poverty calculation with Social Security removed from resources
- Tools: Stata, IPUMS CPS, weighted survey analysis
Key Findings
- Under OPM, Social Security keeps about 23.3 million people out of poverty.
- Under SPM, Social Security keeps about 27.9 million people out of poverty.
- The largest poverty-reduction effect is concentrated among adults age 65 and older.
- Without Social Security, elderly poverty rises sharply under both poverty measures.
Results
Why It Matters
Social Security is often discussed in terms of solvency and retirement finance, but this project shows its role as a major anti-poverty program. The results indicate that the program is especially important for older Americans, many of whom would face much higher rates of hardship without it.
Limitations
This is a counterfactual subtraction exercise, not a full behavioral simulation. The paper does not model changes in labor supply, family support, taxes, or eligibility for other programs that might occur if Social Security income were actually removed.
