Time and Money: Social Security Benefits and Intergenerational Transfers

摘要

Social Security is the single largest component of the federal budget, and looming deficits spell a range of possible changes that could reduce individual earnings from this program. The current Social Security Trust Fund, which helps support 62 million recipients, is expected to be depleted by 2037 (Goss 2010). The eligibility age has increased from age 62 at the program's inception to age 67 for current cohorts, and other proposed changes include a cap on lifetime benefits or a reduction in benefits for high earners. With such major changes potentially on the horizon, it is critical to understand how this form of income support interacts with the informal care provided by intergenerational transfers.This paper examines the impact of Social Security benefits on both pecuniary and non-pecuniary intergenerational transfers. Specifically, I examine how the probability (and amounts) of monetary transfers between parents and children evolve with respect to parental receipt of Social Security benefits. Both inter vivos transfers and intended bequeathing behaviors are studied. The non-pecuniary transfers examined include the hours of help providedbetween parents and children. Since Social Security is currently the dominant source of late-life income replacement, the current analysis also sheds light on how income more generally impacts intergenerational transfers.