Projecting Poverty Rates in 2020 for the 62 and Older Population: What Changes Can We Expect and Why?

This paper analyzes the factors that may be related to increased or decreased poverty among the 62- to 89-year-old population in 2020 using the Social Security Administration's Model of Income in the Near Term (MINT). The authors find that price-adjusted poverty is projected to decline from 7.8 percent in the early 1990s to 4.2 percent in 2020, but that wage-adjusted poverty is projected to increase from 7.8 percent to 9.9 percent. The increase in the normal retirement age and changes in marital composition each explain about 25 percent of the projected increase in wage-adjusted poverty. The changes in the relative earnings of men and women did not affect the poverty rate—it only affected who was in poverty. The rise in earnings inequality had almost no effect on poverty rates largely because of the progressive Social Security payment formula.