Approximately one in four older African Americans and Hispanics in families who receive Social Security benefits rely on the program for all of their income, according to the AARP Public Policy Institute (PPI) publication “Social Security: A Key Retirement Income Source for Older Minorities.”
The PPI analysis found that, in 2011, Social Security kept roughly one-third of older African Americans and Hispanics, and 20 percent of older Asians out of poverty. However, poverty rates for some older minority groups remain twice as high as rates for older whites.
While Social Security is a critical source of income for older African Americans, Hispanics and Asians, these groups are less likely to receive benefits than whites. And for those families who do get Social Security retirement benefits, the typical benefit is less than that of their white peers.
Among the reasons older minorities receive lower Social Security income:
- Minorities tend to earn less, and lower average lifetime earnings result in lower Social Security benefits.
- Minorities have higher disability rates, which are linked to lower employment rates and lower lifetime earnings.
- More than half of older Hispanics and Asians are either naturalized citizens or immigrants and may not have worked in the U.S. long enough to be eligible for Social Security. Those who are eligible may have lower income because of a short work history.
The analysis suggests ways to help older minorities maintain financial security through improving Social Security and other programs:
- Create a Social Security “enhanced minimum benefit” tied to years of work that would reward workers with long careers and low lifetime earnings.
- Include credits for time spent out of the labor force for caregiving, unemployment or poor health.
- Reform the Supplemental Security Income (SSI) program, a federal assistance program for older, blind and disabled people with little or no income. For example, SSI could eliminate benefit reduction for older people who live with others.
- Increase retirement savings by requiring employers without a retirement plan to implement a payroll deduction Individual Retirement Account (IRA).