The Social Security system: benefit differences among racial/ethnic groups

Based on published and unpublished data from the Bureau of the Census and the Social Security Administration, an assessment is presented of how major racial/ethnic groups in the United States fare under Social Security. The Social Security Act was signed into law in 1935 to provide economic security to U.S. workers. Today, there are some 44.5 million Social Security beneficiaries in this country. The majority of these beneficiaries are retired workers (62.3 percent) with survivors of deceased workers comprising another 11.6 percent. Several aspects of the Social Security system are particularly important to minority groups. The data indicate that minorities rely more on Social Security benefits in retirement than do whites. In comparison with only 16 percent of white elderly beneficiaries, one-third of elderly blacks and one-third of elderly Hispanics depend on Social Security payments for 100 percent of their retirement income. Minorities also have less retirement income from other sources, such as pensions and assets, than do whites. Both blacks and Hispanics tend to have lower earnings than whites and, thus, benefit from the progressive benefit formula of the Social Security system. Further, blacks, with shorter life expectancies, benefit more from the disability and survivors benefits than do whites. Social Security has a major impact on poverty rates, particularly for minorities. Without Social Security benefits and no other changes in savings or pensions, poverty rates would be around 60 percent for blacks, Native Americans and Hispanics versus 24, 12 and 20 percent, respectively, with Social Security benefits. The U.S. minority population will continue to grow in both numbers and proportions. By 2050, almost half (47 percent) of the total U.S. population will be minorities due principally to growth in Hispanic, black and Asian populations. The increasingly diverse population will change the composition of the nation's workforce as well as the size and makeup of its elderly population. These demographic changes will be important to consider when evaluating the future role that Social Security will play in the lives of these changing populations.