How Federal Programs Reduce Poverty – Retirement Research Center

About 11 percent of children in poor families are living with adults who receive Social Security retirement, disability, or supplemental cash benefits.

Children are often black or Hispanic. One in four families has an income of less than $35,000, and many children live with retired grandparents. If the child lives with a parent, it is often a single mother.

Although these families rely heavily on their income from Social Security, several federal programs provide additional assistance.

Oh A new study The appendix documents a dramatic drop in the poverty rate—from 25 percent to 13 percent—for vulnerable families when benefits from three major programs are added to their Social Security: Earned Income Taxes for low-income families; credit and a more generous version of the SNAP food stamp and child tax credit that was temporarily in effect during COVID.

The starting poverty rate for families who receive no Social Security benefits because they are working is 18 percent, not 25 percent for families with Social Security. When two tax credits and food stamps are added to their income from working, their rate drops from 18 percent to 8 percent.

In another analysis, the researchers also showed that if the current Child Tax Credit (CTC) from the 1990s was replaced with a more generous COVID credit, poverty would decrease today.

In 2021, the American Rescue Plan increased the CTC from $2,000 to $3,600 for each child under 6 and $3,000 for older children. The monthly credit, which was paid in cash rather than at tax time, expires in December 2021.

The researchers’ analyzes assumed that all eligible families received extended CTC during COVID. In fact, they anticipate it Up to half of eligible families A recipient of Social Security benefits did not receive credit because they did not know they were eligible or did not understand the rules or how to sign up.

It is common in federal assistance programs that many eligible families with children fall through the cracks in the safety net. Even if they are good candidates for food stamps, they may not know how to apply or may have been denied because of application difficulties. Even under the current CTC, very low-income families may not qualify because they do not file federal income taxes.

The study shows how important federal aid is to low-income caregivers and children dependent on Social Security — and how important it is to make sure everyone who’s eligible is getting it.

“Steps to enroll eligible beneficiary families in these benefits are critical,” the study concluded.

To read this the study See “Social Security Administration’s Growing Interest in Child Tax Credit and Other Child-Driven Income Support Programs,” by Madeline L’Esperance, Shogher Ohannessian, Jevay Grooms, and Tim Smeeding.

The research reported here is derived in whole or in part from research activities conducted pursuant to a grant from the US Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the authors and do not represent the opinion or policy of SSA, any agency of the federal government, or Boston College. Neither the United States Government nor any of its agencies, nor any of their employees, makes any warranty, express or implied, as to the accuracy, completeness, or usefulness of the contents of this report, or any legal responsibility or liability. Does not accept ownership. Reference to a trade name, trademark, manufacturer, or otherwise of a particular commercial product, process or service does not necessarily imply endorsement, recommendation or support by the United States Government or any of its agencies.

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