|
Hispanics and Social Security
SocSec.org
June 28, 2005
Proponents of Social Security private accounts sometimes contend that Hispanics, among other groups, do worse under traditional Social Security. But as the Center on Budget and Policy Priorities points out in two new reports, Hispanics receive higher returns than the overall population, and would do worse under Social Security privatization.
Hispanic workers possess a number of characteristics that actually result in higher Social Security replacement rates than the rest of the population receives. They have lower lifetime earnings than the average worker, which means that Social Security replaces a larger share of their income.
Hispanics also have longer life spans, so that they receive benefits for more months than the average retiree. In addition, Hispanic workers suffer from higher levels of disability, and therefore benefit from the disability insurance aspect of Social Security.
Finally, Hispanic families have more children, on average, so that in the event of a parent's death or disability, children receive benefits, and the family is not left to struggle on its own.
Currently Hispanics rely on Social Security more than other retirees due to their low participation in employer-sponsored retirement plans, and low overall retirement savings. While 51 percent of Hispanic Social Security recipients rely on Social Security for more than 90 percent of retirement income, only 34 percent of the general retired population does.
Social Security also lifts a large proportion of Hispanic seniors out of poverty. Without Social Security, 51 percent of elderly Hispanic recipients would live below the poverty line, but Social Security reduces the number to 18 percent.
The second Center report goes on to point out that Hispanics not only do better under traditional Social Security, they would do worse under a system of private accounts. Because Hispanics benefit disproportionately from Social Security, they also have more to lose.
The Hispanic population is also quite young. Because the financial burden of proposals to create private accounts and cut traditional benefits will be borne by the young, the cost will fall heavily on the Hispanic population.
Some of the characteristics that make Social Security so good for Hispanic workers are issues about which we should be concerned: low wages, high disability rates, and lack of savings for retirement. Yet we should also recognize that Social Security protects workers and their families who possess these characteristics, and that private accounts would only make things worse.
|
