Lower-Paying Jobs Mean Lower Benefits
Social Security benefits are determined by a formula that takes into consideration a person's lifetime earnings. Because many retired Hispanics, like Marte, worked low-income jobs, benefits for Latinos tend to be lower than those of other Americans.
"Lower lifetimes of earnings mean Latino retirees receive a lower benefit amount, and this contributes to the fact that they are twice as likely to be poor as other Americans receiving Social Security benefits," says Marisabel Torres, a policy analyst for the National Council of La Raza.
According to the Social Security Administration, the median income of Hispanics who worked full time was $30,000 in 2008, the most recent year for which this data is available. The average income for all working-age people that year was $40,000.
That discrepancy is reflected when Hispanics retire. The median Social Security income of Hispanics in 2008 was $10,662, compared to $10,863 for blacks and $14,262 for non-Hispanic whites. Hispanics are also hurt by having worked for employers who don't pay Social Security taxes or report their workers' wages to the federal government.
About a quarter of retirement-aged Latinos don't collect benefits. In contrast, some 90 percent of non-Hispanic white Americans who are eligible for Social Security receive benefits. Hispanics outside the system include legal residents who haven't completed a five-year waiting period for eligibility and undocumented immigrants who are barred from the program.
Immigration reform that would allow undocumented immigrants to legalize their status would boost the numbers of Hispanics receiving Social Security benefits, NCLR's Torres says. The Social Security Administration estimates that about 30 percent of those shut out of the system because they are undocumented have earned enough wages to qualify for benefits. But because of a number of other conditions they would have to meet to correct their immigration status, only about 10 percent would be likely to receive benefits, says Torres.
The Social Security Administration has many Spanish-speaking employees who can help retirement-age Latinos navigate their way through the process, says agency spokesperson Mark Lassiter. In addition, he says, this fall the agency will launch a Spanish-language interactive website that will help people estimate their Social Security retirement benefits.
"When it comes to the benefit structure, all Americans are treated the same," Lassiter says. "But we're doing everything we can to reach out to Latinos and make them aware of Social Security benefits and programs."
While older Hispanics, like Marte, are more likely to live with family members than other Americans, Garcia of Syracuse University says the recession has spawned a new trend: A growing number of retired Hispanics who are dependent on Social Security and once were "empty nesters" have had newly unemployed children move back in with them.
"So Social Security provides economic stability for elderly parents whose adult children are economically unstable due to the economic recession," Garcia says. The recession is also hurting Hispanic retirees who try to bolster their income with part-time jobs, he adds, Latinos are often the last hired and the first fired.
With fewer and fewer companies offering their workers pensions and the absence of discretionary income producing a low retirement-savings rate among Hispanics, Latinos will continue to rely on Social Security for most of their retirement income for decades.
But there's a looming problem: As more Hispanics rely on Social Security, there may be less to depend on.
To make sure Social Security remains financially sound, some politicians have suggested raising the eligibility age to 70.
But that—and any other attempt to diminish Social Security benefits—would disproportionately hurt Latinos and other low-income people who need the program the most, Garcia says.
"We need to keep Social Security away from politicians," he says. "We need to recognize its success."
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