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How Social Security Keeps Older Persons Out of Poverty Across Developed Countries

Without Social Security income, a large portion of the older population in the United States and all other developed countries would live in poverty. This AARP Public Policy Institute Data Digest analyzes how or to what extent Social Security keeps older persons out of poverty by examining changes in poverty rates of older persons with and without Social Security income across 15 developed countries – Australia, Austria, Belgium, Canada, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Sweden, United Kingdom and United States.

The results indicate that, without Social Security income, more than half of older persons would be in poverty on average in the 15 selected countries. In addition, Social Security benefits are more likely to keep older women and persons age 75 and older out of poverty than older men and persons age 65 to 74.

These findings are subject to an important caveat. Without Social Security protection, economists believe individuals would change their economic behavior and governments would adjust their policies to increase older persons' retirement income. However, it is undeniable that Social Security makes up a large portion of the incomes of the older population in the developed countries.

The data used in this analysis are from the Luxembourg Income Study (LIS) database which contains the information needed to construct comparable poverty measures for about two dozen countries. (8 pages)