In contrast, the Supplemental Security Income (SSI) program provides income support to eligible aged and disabled persons regardless of their earnings history. Funds for SSI benefits come from general revenues, not payroll taxes. To address the program’s long-term financing shortfall, a variety of proposals have been offered. Parameters of the benefit formula were automatically adjusted to reflect inflation, and the adjustments affected levels of benefits for both existing and new beneficiaries. Moreover, various amendments extended eligibility to more types of beneficiaries. No Single Measure Gives Complete Picture of Income Adequacy

Various measures have been developed to examine different aspects of income adequacy, but no single measure offers a complete picture. Social Security and Other Types of Retirement Income Have Grown Over Time

Over the same period that the income adequacy has increased for the elderly, Social Security has become the single largest source of retirement income. Percent of elderly households with income below poverty Poverty rates also vary by living situation. Income Adequacy in the Future Will Depend on Extent and Nature of Program Changes

The outlook for future Social Security benefit levels and thus their effect on income adequacy generally will depend on how the program’s long- term financing imbalance is addressed, as well as on the measures used. If disabled and survivor benefits were not reduced at all, reductions in other benefits would be deeper than shown in this analysis. Also, an SSA actuarial note observes that “policymakers are interested in replacement ratios: (1) as a means of communicating to prospective beneficiaries approximately how much they can expect to receive from Social Security, relative to their earnings; and (2) as a means of deciding if and how the Social Security program should be changed to meet the needs and desires of the public…”
Replacement rates have also been used with respect to employer- sponsored pensions and retirement income more broadly, using total income amounts in the ratio. PIA = 90% ! sources.
What GAO Found

Before Social Security, being old often meant being poor. Today, dependency on public assistance has dropped to a fraction of its Depression-era levels, and poverty rates among the elderly are now lower than for the population as a whole. At the same time, Social Security has become the single largest source of retirement income for more than 90 percent of persons aged 65 and older. Automatic adjustments were introduced in 1972 to reflect increases in the cost of living. Other program changes gradually increased social security coverage to larger portions of the workforce and extended eligibility to family members and disabled workers. Other benefit programs, such as Supplemental Security Income (SSI), Medicare, and Medicaid, have also been added over the years. With regard to measuring income adequacy, various measures help examine different aspects of this concept, but no single measure can provide a complete picture. For various subgroups of beneficiaries that have lower lifetime earnings, poverty rates have also declined. Although the Social Security benefit formula favors lower lifetime earners, their lower earnings and work histories can leave them with incomes below the poverty level when they retire or become disabled. The outlook for future Social Security benefit levels and income adequacy depend on how the program's long-term financing imbalance is addressed, as well as on the measures used. GAO concludes that reductions in promised benefits and increases in program revenues will be needed to restore the program's long-term solvency and sustainability. Possible benefit changes might include adjustments to the benefit formula or reductions in cost-of-living increases. Possible revenue sources might include higher payroll taxes or transfers from the Treasury's general fund.