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Social Security narrows wealth gap between high- and low-income households

A working paper from the Federal Reserve Bank of Boston presents a new conceptualization of household wealth that accounts for the patterned availability of wealth components across the population. Specifically, the authors extend the definition of wealth beyond market-based assets to also include estimated pension and Social Security distributions, which are critical elements of retirement-financing savings for many seniors. The paper finds that by including these resources in wealth calculations, the gap in wealth between the highest-income and lowest-income households, which is well documented with traditional measures, appears smaller when also including pensions and Social Security. Findings indicate that reductions in Social Security benefits would have significant implications for wealth distribution and for the economic wellbeing of the lowest-earning households in particular. #weath&assets