Is Social Security Considered Income for Poverty Level? Understanding the Rules

According to the Census Bureau, Social Security benefits lift millions of people, particularly older adults, out of poverty each year, underscoring their vital role in financial security.

But when federal agencies are performing their official calculations, is Social Security considered income for poverty level determinations? The short answer is yes, though the specific method depends on the measure used.

Quick Summary

Yes, Social Security is counted as income when determining poverty status, though measurement methods vary depending on the agency.

Benefits are included in the U.S. Census Bureau's Official Poverty Measure (OPM), and more comprehensive measures like the Supplemental Poverty Measure (SPM) also account for them.

Key Points

• Yes, it is counted: The U.S. Census Bureau includes Social Security benefits as a form of cash income when determining a household's Official Poverty Measure (OPM) status [1].

• Two measures exist: The U.S. uses two main poverty measures, the Official Poverty Measure (OPM) and the Supplemental Poverty Measure (SPM), which have different rules for income and expenses [1].

• SPM is more comprehensive: The SPM offers a more complete financial picture by subtracting critical expenses, like out-of-pocket medical costs, which can impact a senior's poverty status [1].

• Reduces poverty significantly: Social Security is a powerful tool for poverty reduction, lifting millions of adults and children above the poverty line each year [2].

• Know the program rules: For eligibility for other programs like Medicaid, it's essential to check the specific income calculation rules, which may differ from the official poverty definitions [1].

The Official Poverty Measure (OPM) and Social Security

The U.S. Census Bureau uses the Official Poverty Measure (OPM) to determine poverty status. This measure relies on pre-tax cash income, comparing it to poverty thresholds based on family size and composition.

Under the OPM, Social Security benefits (retirement, survivor, and disability) are explicitly included as income, along with sources like earnings, unemployment benefits, and pensions [1]. If a household's total pre-tax cash income falls below the relevant threshold, all members are considered to be in poverty [1].

The OPM considers several types of cash income, including wages, Social Security, Supplemental Security Income (SSI), public assistance, and pension income [1].

The Supplemental Poverty Measure (SPM): A Broader View

The Supplemental Poverty Measure (SPM), developed by the Census Bureau, provides a more comprehensive view of poverty [1]. Like the OPM, the SPM counts Social Security as income, but it also includes non-cash benefits and subtracts necessary expenses [1]. This broader approach can lead to different poverty estimates, particularly for seniors [1].

How SPM Calculation Affects Seniors

The SPM considers non-cash government benefits, such as food assistance and housing subsidies, as resources. It also subtracts expenses, including taxes, work-related costs, and importantly for older adults, out-of-pocket medical expenses (MOOP) [1]. Because seniors often have significant medical costs, the SPM may show a higher poverty rate among this group compared to the OPM [1].

The Crucial Difference Between Social Security and SSI

Social Security benefits and Supplemental Security Income (SSI) are both administered by the Social Security Administration but are distinct programs [1]. Social Security is an earned benefit based on work history, while SSI is a needs-based program for individuals who are aged, blind, or disabled with limited income and resources [1]. Both are considered income for poverty calculations, but they serve different purposes and have different eligibility requirements [1].

A Deeper Dive: Comparison of Poverty Measures

Understanding the OPM and SPM involves recognizing their different approaches to income and expenses [1].

Feature	Official Poverty Measure (OPM)	Supplemental Poverty Measure (SPM)
Resource Measure	Pre-tax cash income only. Includes Social Security [1].	Cash income + refundable tax credits + non-cash benefits (e.g., SNAP, housing). Includes Social Security [1].
Expenses Subtracted	None [1].	Taxes, medical out-of-pocket (MOOP), work/child care expenses [1].
Threshold Basis	A 1963 minimum food diet cost, adjusted for inflation [1].	Based on recent consumer expenditures for food, clothing, shelter, utilities, etc. [1].
Geographic Variation	No. Same thresholds for the entire U.S. [1].	Yes. Thresholds are adjusted for differences in housing costs across the country [1].
Unit of Measurement	Related family members residing together [1].	A broader definition, including unmarried partners and their children [1].

Social Security's Anti-Poverty Impact in Reality

Social Security significantly reduces poverty [2]. Data indicates that without these benefits, millions more adults and children would live in poverty [2]. Social Security is frequently a primary income source for older adults, particularly women and people of color [2]. While the average benefit might be above the individual poverty line, factors like medical costs considered in the SPM can still place beneficiaries in or near poverty [1, 2].

Conclusion: More Than a Simple Yes or No

So, is Social Security considered income for poverty level calculations? Yes, it is, under both the OPM and SPM, though the specifics of how income and needs are calculated vary between the two measures [1]. For most federal aid programs, Social Security income is a factor in eligibility [1]. This highlights the importance for seniors and their families to understand not just that benefits count as income, but also how different calculation methods can impact access to other forms of assistance [1].

For authoritative information on how the Census Bureau measures poverty, visit the U.S. Census Bureau's official poverty measurement page [1].

Frequently Asked Questions

Do Social Security retirement benefits count for the federal poverty level?

Yes, Social Security retirement benefits are counted as income by the U.S. Census Bureau when calculating a household's official poverty status under both the OPM and SPM [1].

Is there a different way to measure poverty that considers more factors?

Yes, the Supplemental Poverty Measure (SPM) is a more comprehensive measure that accounts for a wider range of resources and expenses, including non-cash benefits and medical costs, unlike the OPM [1].

How does the Supplemental Poverty Measure affect seniors compared to the Official Poverty Measure?

The SPM often results in a higher poverty rate for seniors because it subtracts out-of-pocket medical expenses (MOOP), which are often significant for this demographic, from their total income, providing a more realistic view of their financial state [1].

Are all Social Security payments considered income?

For official poverty measures, all types of cash payments from the Social Security Administration—including retirement, survivor, and disability benefits—are considered income [1].

How is Supplemental Security Income (SSI) different from regular Social Security for poverty calculations?

SSI is a needs-based benefit, unlike earned Social Security. Both are included as income under the OPM and SPM, but SSI has strict income and asset limits, meaning recipients are typically in poverty [1].

Where can I find the official poverty thresholds?

The U.S. Department of Health and Human Services (HHS) publishes the Federal Poverty Guidelines annually. The U.S. Census Bureau also publishes the official poverty thresholds and information on both the OPM and SPM [1].

Do non-cash benefits like food stamps affect my official poverty status?

Under the Official Poverty Measure (OPM), non-cash benefits are not counted as income. However, they are included as resources under the Supplemental Poverty Measure (SPM), which provides a broader view of a household's available resources [1].