MONEY MONEY MONEY: SSM AND SOCIAL SECURITY: Noam Schreiber

...The idea of a run on Social Security survivor benefits being an unforeseen consequence of gay marriage struck me as so absurd I decided to do a little checking around. Now that I've done so, it strikes me as even more absurd. First, about 1.2 million people identified themselves as part of a gay or lesbian couple in the latest census. Let's assume for the sake of argument that this is approximately the number of gays and lesbians who would get married if gay marriage suddenly became legal and available across the country. (I think that's pretty high, since being part of a couple doesn't necessarily mean you want to get married. But, on the other hand, I imagine that the number of gay couples has increased since the census data were collected almost four years ago.)

Anyway, a quick check of the Social Security Administration web site reveals that the number of people who receive survivor benefits in a typical month is about 7 million. As there are about 120 million married people in the country, let's assume that a country of 120 million married people produces about 7 million kids and widows/widowers who receive survivor benefits--or, put differently, that the number of people who receive survivor benefits is about 6 percent of the number of married people. (I realize this isn't a perfect assumption: The number of married people that produced those 7 million survivors was probably somewhat different from 120 million. But I think these numbers provide a reasonable estimate.) Assuming the same relationship applies to the gay population, then 1.2 million married gay people should produce about 70,000 people who will claim survivor benefits. Which means that, for the foreseeable future, we're probably not talking about more than 100,000 additional people earning survivor benefits, out of a total of 7 million currently earning survivor benefits, if gay marriage is legalized. That's an increase of less than 1.5 percent--in dollar terms, less than $1 billion out of the $60 billion or so we pay out in survivor benefits each year. This, of course, is peanuts compared with an annual federal budget of $2.4 trillion and annual Social Security disbursements of nearly $500 billion. ...

But wait, there's more. As Brookings Social Security experts Henry Aaron and Peter Orszag point out, the way survivor benefits work is that survivors get either their own Social Security benefits or the their own benefits plus the difference between their benefits and the benefits their deceased spouse would have received--whichever number turns out to be higher. Which means that, in a couple with two income-earners in which both partners earn about the same amount of money, the survivor benefits are worth almost nothing. (This doesn't take kids into account, whose survivor benefits are calculated differently.) And it turns out that gay couples are much more likely than the average heterosexual couple to have a.) two income-earners, and b.) two income-earners who make roughly the same amount. That means that, in many cases, the survivor benefit for gay people would be zero or close to zero--bringing our earlier estimate down substantially.

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posted by Eve at 5:27 PM VOTE

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