The Effect of Means-Tested Income Support for the Elderly on Pre-Retirement Saving : Evidence from the Ssi Program in the U.S

We attempt to draw inferences about potential behavioral responses to means-testedquot; income support for the elderly by examining the effects on saving of the Supplemental Securityquot; Income (SSI) program for the aged in the U.S. Part of the SSI program provides payments to thequot; poor elderly, thus operating as a means-tested public retirement program. The federalquot; government sets eligibility criteria and benefit levels for the federal component of the program but many states supplement federal SSI benefits substantially. We exploit the state-levelquot; variation in SSI benefits to estimate the effects of SSI on saving. We use data from selectedquot; waves of the 1984 Survey of Income Program Participation (SIPP). We find evidence that highquot; SSI benefits reduce saving among households with heads who are approaching the SSI eligibilityquot; age and who are likely participants in the program