Social Security protects families if a worker retires, becomes disabled or dies. These guaranteed insurance benefits are especially crucial to people of color who tend to have fewer alternative resources, become disabled at higher rates, and disproportionately rely on Social Security’s family benefit features. African American workers more than most other Americans are concentrated in low-wage jobs that typically lack pension coverage, experience higher poverty and unemployment rates, and have less ability to save and invest for retirement. Social Security, therefore, provides many elderly African Americans with their sole or primary source of income in retirement. Consequently, preserving the current system with its guaranteed benefits is crucial for African Americans.
African Americans Rely on Social Security for More of Their Retirement Income
While Social Security is expected to be only one part of a person’s retirement income, many people of color rely on it for more of their income. Because African Americans tend to have lower earnings and less pension coverage than white Americans, Social Security is extremely important for African American retirees. In 2017, among African Americans receiving Social Security, 35 percent of elderly married couples and 58 percent of unmarried elderly persons relied on Social Security for 90 percent or more of their income.
People of color rely more heavily on Social Security due to a lack of other income in retirement. Few elderly people of color receive income from pensions and assets. In 2016, white families had about six times more in average liquid retirement savings than African American families. This is because workers with lower earnings have a harder time saving. The average white man earns $2.7 million over a lifetime, while the average black man earns $1.8 million.
The importance of Social Security to people of color is emphasized by current poverty rates. Without Social Security 50.5 percent of African Americans would be living in poverty. With Social Security that number is reduced to 18.8.
Program Aspects Important To African Americans
Although Social Security’s benefit and contribution provisions are neutral with respect to race, ethnicity, and gender, several features of the program are especially important to African Americans. The progressive benefit formula intentionally helps low income earners, many of whom are African American. In the aggregate, African Americans have higher disability rates and lower lifetime earnings, and thus receive greater benefits relative to taxes paid. Furthermore, lower than average life expectancy results in a proportionately higher share of survivor benefits.
Progressive Benefit Formula
Social Security employs a progressive formula that intentionally returns a higher percentage of wages to low and average-wage earners than it returns to those who have had high earnings. Lifetime earnings directly factor into Social Security’s progressive benefit formula. African Americans, on average, have lower levels of lifetime earnings than white workers.
The median earnings of working-age African Americans who worked full-time, year-round in jobs covered by Social Security in 2017 was about $40,000, compared to $48,000 for all working-age people.
In 2017, the average annual benefit for African Americans receiving retired worker benefits was $16,265 for men and $13,574 for women, compared to $18,785 for all men and $14,923 for all women. As a result of their over-representation among workers receiving the lowest earnings and their under-representation among workers receiving the highest level of earnings, African Americans gain from Social Security’s progressive benefit formula.
African Americans have higher rates of disability and consequently are more likely to receive benefits from the Social Security Disability Insurance (DI) program. In general, workers with a higher probability of becoming disabled have a higher benefits-received-to-taxes-paid ratio than those who are not disabled. This is because DI beneficiaries begin to receive benefits and cease contributing payroll taxes at an earlier age than workers who are not disabled. The higher incidence of disability among African Americans increases their benefit-to-tax ratio.
Because low-wage DI beneficiaries also gain from the program’s progressive benefits formula, low-wage, disabled workers benefit from two aspects of the program. African Americans are disproportionately represented among both disabled workers and low-wage earners. Moreover, it is important to note that DI benefits are paid not only to disabled workers but to the families of such workers as well. African American children receiving benefits because a parent is disabled represent a larger share of children receiving benefits than their percentage representation in the population at large, so they benefit disproportionately from Social Security’s DI component.
Among workers who live until retirement age, African Americans are expected to receive benefits for fewer years than white or Latinx retirees because they have shorter life expectancies. While African American workers have a higher probability of dying before retirement and of living fewer years after retirement, their families are more likely to receive Social Security survivor benefits.
The percentage of African American children who receive Social Security survivor benefits is higher than their percentage representation in the population of all children. Furthermore, African American men usually die at dramatically younger ages, rather than dying at or just prior to retirement.
When African American and white males reach the age of 65, the actual difference in their life expectancy has decreased to less than two years. And because African Americans are more likely to take early retirement at the age of 62, the difference in the number of years that African American and white males receive benefits is further reduced.
The Need to Reinstate Racial and Ethnic Data Collections and Analysis
Until 2014, the Social Security Administration published data by race and ethnicity including the following:
- 26 percent of African Americans received income from assets, compared with more than 55 percent of Whites.
- 21 percent of African Americans 65 years old and over reported receiving income from private pensions or annuities, compared to 28 percent of whites 65 years old and older.
The Administration has discontinued providing this data, stating it is conducting a thorough review of data sources for this information in order to ensure its accuracy. These data have proved invaluable to researchers, policy makers and advocacy groups. The National Committee urges the Social Security Administration to resume publication of these important data sets. We believe SSA should gather and publish contemporaneous programmatic data based on race and ethnicity because understanding how Social Security serves communities of color is essential to defending the program from those who want to attack it, as well as ensuring that the program serves our entire community as was intended.
Social Security is Important to African Americans https://www.ssa.gov/news/press/factsheets/africanamer-alt.pdf
Social Security Lifts More Americans Above Poverty Than Any Other Program https://www.cbpp.org/research/social-security/social-security-lifts-more-americans-above-poverty-than-any-other-program
Table 15. Life expectancy at birth, at age 65, and at age 75, by sex, race, and Hispanic origin: United States, selected years 1900-2016 https://www.cdc.gov/nchs/data/hus/2017/015.pdf
The Population 65 Years and Older in the United States: 2016 https://www.census.gov/content/dam/Census/library/publications/2018/acs/ACS-38.pdf
Nine Charts about Wealth Inequality in America (Updated)
Income of the Aged Chartbook, 2014 Social Security Administration,
Income of the Population 55 or Older, Social Security Administration,