(UM00-10) - The Role of Social Security Transfer Programs in Protecting Older People Transitioning into Retirement and Widowhood: A Cross-National Perspective
Richard V. Burkhauser and J.S. Butler
Work in the marketplace is the primary source of income for most households in modern industrial societies. A permanent or even a long-term exit from work by a household’s principal earner is therefore a potentially risky event. Most countries now have a mix of private and public institutions to ameliorate the economic consequences of such exits. On the public side, most social insurance systems provide income to those who exit work at older ages (retirement, survivor benefits) or at younger ages because of health conditions (disability, workers’ compensation, survivor benefits). Most countries also offer long-term unemployment benefits and an array of means-tested welfare programs. On the private side, private employer fringe benefits provide protection following a labor force exit due to redundancy, disability, retirement or death. Furthermore, some households can use income from their accumulated wealth, from the added market worth of other household members, or from life insurance settlements to offset their principal earner’s lost income. In this paper, we describe a study that takes advantage of a newly expanded source of cross-national panel data to trace the economic well-being of the households of men and women who exit the labor market in four countries. Our key finding is that studies that focus on traditional social security replacement rates (own social security benefits divided by own labor earnings) to gauge the relative economic well being of those who exit the labor market will understate the true fall in household income following an exit and disproportionately do so for the United States and Canada.