JSIT19-05: The Impact of Social Security Eligibility on Transfers to Elderly Parents and Wealth -building among Adult Children

In this study, I explore the impact of social security eligibility on transfers between adult children and elderly parents and the resulting impact on wealth-building among adult children. I also describe these relationships across different racial and socioeconomic groups. I use data from the PSID and a regression discontinuity approach where I describe the outcomes before and at the parents’ social security eligibility age. The main findings show that almost all groups reduce transfers at the threshold age, but the reduction in the probability that a parent receives transfers is stronger for economically disadvantaged groups. I also find that wealth of adult children increases at the threshold age and this increase is strongest for children of low-income parents. These findings support the hypothesis that by reducing the reliance of parents on their adult children Social Security may contribute to wealth-building among the adult children generation.