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Retirement

Latinos' Crucial Contributions to Social Security

The growing Hispanic population will provide increasing contributions to Social Security coffers.

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— Les and Dave Jacobs/cultura/Corbis

En español | A monthly Social Security check is all the money many Hispanic retirees rely on. They are less likely than other Americans to have other forms of retirement income, such as pensions or special retirement savings accounts like 401(k) plans. Yet the growing Hispanic population provides increasing contributions to Social Security coffers. That's why the fate of the program, celebrating its 75th anniversary, is of special importance to Hispanics.

Giving
The Latino community is younger than the general U.S. population because it includes many newly arrived immigrants, who tend to be young. Hispanics also have a higher birth rate than that of the general population. As a result, the percentage of Hispanics in the workforce will increase as the rest of the U.S. population ages: a projected increase of 30 percent from 2006 to 2016, according to the U.S. Bureau of Labor Statistics, compared to 5 percent for the non-Hispanic workforce.

That means that as the nation's 80 million aging baby boomers start relying on Social Security, Hispanics' contributions to the Social Security Trust Fund are rising. And the trend is expected to continue. Latino participation in the workforce is projected to more than double by 2050, increasing to about 46 million, according to a Pew Hispanic Center report, while the non-Hispanic white labor force is projected to fall to 94 million in 2050, down from 100 million in 2005.

"The Social Security system should be glad Latinos are going to be a growing segment of the workforce," says Fernando Torres-Gil, director of UCLA's Center for Policy Research on Aging, since Latinos are putting in much more than they're taking out and will continue to do so for years.

And Hispanic workers contribute a greater share of their paychecks to the trust fund because they're less likely to hit the annual cap of $106,800 on the Social Security tax deduction on earnings, he says. In addition, Latinos who are undocumented workers pay billions of dollars into a program they will never use.

According to the Social Security Administration, workers with Social Security numbers that cannot be verified—many of them suspected of belonging to undocumented Hispanic workers—contributed $11 billion to the trust fund in 2007, the last year for which such data is available.

Vital Income

But as the Hispanic population matures, the number who need to tap into Social Security—now about 3.3 million—is expected to grow. By 2050, the 50-plus Latino population will nearly quadruple, according to an Urban Institute study. Nearly one in four Americans in that age group will be Hispanic. And as the community matures and gains earning power, there's evidence that Social Security will be the main retirement program for Latinos for decades to come.

That income is keeping older Hispanics out of poverty. Less than a fifth of the nation's elderly Hispanics live in poverty, according to a 2005 study by the Center on Budget and Policy Priorities. Without Social Security, more than half would. "For many older Latinos, Social Security is either the sole source of income or the major source of income," says Alejandro Garcia, professor of social policy and gerontology at Syracuse University.

That's true for Rosalie Marte, a 72-year-old immigrant from the Dominican Republic who lives in Washington D.C. She worked as a dishwasher in a restaurant for about seven of the 18 years she has lived in the United States. Now retired, Marte receives $484 in retirement benefits each month and another $190 in Supplemental Security Income, known as SSI, a federal program that helps people that are age 65 and older, blind or disabled who have little or no income.

Although Marte has little money, her Social Security check gives her some independence and allows her to pay a modest amount of rent to the daughter she lives with.

"What I give her isn't much, but it helps," Marte says.

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