Although many African Americans depend on Social Security benefits to meet their basic needs, the value of the program to this group is often debated and sometimes misrepresented or discounted. At a time when the nation is seeking to put its financial house in order and concurrently considering reforms to guarantee the future solvency and sustainability of Social Security, the Joint Center for Political and Economic Studies, with support from AARP, prepared this primer to spell out the facts about how Social Security's disability, survivor and retirement programs serve African Americans.

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African Americans are far more reliant on the Social Security program than many realize, and accordingly they need to take an active role in the debate over its future, according to a new report from the Joint Center for Political and Economic Studies.

African Americans and Social Security: A Primer, released Monday, dispels misrepresentations about African Americans – such as those supporting the belief that African Americans do not benefit from Social Security because of their shorter life expectancy.  Information in the report is intended to provide a basis for discussion as Congress considers changes to the retirement, disability and survivor benefits program as a means of addressing the nation’s fiscal woes.

Between 1997 and 2005, numerous polls were conducted to assess the views of the U.S. population about savings behavior, expected sources of retirement income, and the status of the Social Security system. This report examines findings from these polls for African Americans, white Americans, and persons of all races (combined) and makes comparisons across racial/ethnic groups as data allow. The vast majority of these polls surveyed the general population without disaggregation by race. For example, 38 polls of persons of all races (combined) conducted between 1999 and 2005 were identified that included a question about optional stock market investment by individuals to foster the solvency of the Social Security system. However, only four polls (two by the Joint Center for Political and Economic Studies, one by AARP, and a survey series by Ariel Mutual Funds/Charles Schwab & Company, Inc.) were identified that surveyed either African Americans alone or African Americans along with other racial groups about this issue. As a result, racial comparisons cannot be made for all issues.

Despite these challenges, this analysis of public wealth-related knowledge and savings behavior reveals that many individuals do not have adequate personal savings and investments for retirement. This information powerfully demonstrates the need for social insurance, in particular for the Social Security program. In addition, knowledge gleaned from surveys about various racial/ethnic groups' views of Social Security reform proposals can help guide the development of reform proposals that address the needs and concerns of these groups. The major findings of this report are presented below.

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Date Published: April 2007
 

The Old Age, Survivors, and Disability (OASDI) program of the Social Security Administration helps meet the needs of persons who have retired (Old Age), dependents of persons who are deceased (Survivors), and persons who have become disabled, as well as their dependents (Disability). Although the Social Security system consists of these three components, when system reforms are discussed, the emphasis primarily is on retirement benefits. In recent years, however, national attention has been drawn to the SSDI, or disability, program. The number of applicants for SSDI has increased due to an expansion of the classes of disabilities that could qualify an individual for benefits and to the numerous claims being filed by veterans of recent wars, such as the War in Iraq.

This increase in SSDI applications has resulted in lengthy time lags in processing the paperwork before eligible individuals can receive benefits. Enrollment in the SSDI program also has increased dramatically. Over the past two decades, the proportion of individuals between the ages of 25 and 64 who receive SSDI benefits nearly doubled, rising from 2.2 percent in 1985 to 4.1 percent in 2005 (Autor and Duggan 2006).

To be eligible to receive Social Security Disability Insurance (SSDI) benefits, a person must (1) have worked in a job covered by Social Security for at least five of the past ten years, and (2) have a medically determinable physical or mental impairment that is expected to result in death or to last for at least a year and that prevents the individual from engaging in substantial gainful activity (Autor and Duggan 2006). The SSDI program provides benefits to a disabled worker, his/her spouse, and his/her children. The amount of monthly benefits is pegged to the amount of taxable earnings of the disabled worker.

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Date Published: July 2007
 

African American women share with other women and with African American men characteristics that shape their beneficiary status under the Social Security system, as well as their views of the retirement income program. Like other women, African American women live more years than African American men and thus receive retirement benefits from Social Security for a longer period than their male counterparts. In addition, African American women and women of other racial/ ethnic groups benefit from the progressive formula used to calculate Social Security retirement benefits, which provides lower-wage earners a higher percentage of their earnings relative to higher-wage earners. Women disproportionately benefit from the use of this formula, since they dominate the ranks of low-wage lifetime earners due to frequent employment in temporary and part-time jobs.

Joint Center for Political and Economic Studies National Opinion Poll of African American Adults About Social Security and Wealth, conducted in late 2005, found that African American men and African American women also shared many views about the Social Security system. e poll, which included 850 African Americans ages 18 years and older, found that African American men and African American women alike doubt that Social Security will meet all of their financial needs during retirement. Neither group reported substantial personal savings and investments to close the anticipated retirement income gap. us, the retirement years for African Americans may not be golden, but instead may be rife with financial insecurity.

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Publication date: June 2006

Half of African Americans ages 18-25 consider themselves to be well-informed about the Social Security system. When compared to their older counterparts, however, these youngest African American adults have more correct information about the big-picture impacts of the Social Security system than about various details of the system's operations, e.g., age(s) at which one becomes eligible, how Social Security taxes are spent. Perhaps in part because of the large number of years between their current ages and the eligibility age(s) for Social Security, 18- to 25-year-old African Americans are less likely to view as major problems and more likely to view as minor problems known demographic and labor market factors that will impinge upon the system's solvency before their retirement years. These youngest adults also are more supportive than their older counterparts of selected reform proposals that could reduce the amounts that retirees receive in benefits from the Social Security system.

Perhaps most importantly, when compared to older African Americans, these youngest African American adults are simultaneously less likely to believe that Social Security will be their major source of retirement income and less likely to have begun accumulating other forms of retirement savings. ere may be good reasons for this behavior, such as indebtedness from post-secondary education. It does not bode well, however, for the financial security of members of this age cohort during retirement.

Joint Center for Political and Economic Studies National Opinion Poll of African American Adults About Social Security and Wealth identified these and other findings. The poll, conducted in late 2005, surveyed 850 African Americans ages 18 and older. is fact sheet features the major findings about African Americans ages 18-25, who constitute 18 percent of the survey sample.

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Publication date: June 2006

Well-publicized and much-discussed potential insolvency of the Social Security Trust Fund concerns African Americans ages 51-64 much more than it does younger African Americans. is may be tied to the fact that many 51- to 64-year-olds have not accumulated adequate personal savings and investments and expect to rely upon Social Security as a major source of retirement income. About one-third (35 percent) of 51- to 64-year-old African Americans expect Social Security to be their major source of retirement income.

However, 51- to 64-year-olds are less likely than younger African American adults to support selected reform proposals that could ensure the future solvency of the Social Security system. For example, about one in every five 51- to 64-year-olds (18 percent) supports partially privatizing the Social Security system, compared to about one-third of 18- to 25-year-olds, 26- to 35-year-olds, and 36- to 50-year-olds. Similarly, only one-quarter (25 percent) of 51- to 64-year-olds support reducing the annual cost-of-living adjustment to Social Security benefits, compared to 48 percent of 18- to 25-year-olds and 39 percent of 26- to 35-year-olds. is lack of support perhaps stems from the fear that these reform proposals will reduce the amount of their Social Security retirement benefits and from the awareness that they have less time than younger adults to accumulate alternate savings and investments to depend on should their Social Security benefits be jeopardized.

Joint Center for Political and Economic Studies National Opinion Poll of African American Adults About Social Security and Wealth identified these and other findings. The poll, conducted in late 2005, surveyed 850 African Americans ages 18 and older. is fact sheet features the major findings about African Americans ages 51-64, who constitute 22 percent of the survey sample.

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Publication date: June 2006

Income is the personal characteristic most often thought to be associated with differences in knowledge, expectations, and opinions about Social Security and wealth. For example, one would hypothesize that individuals with low incomes would be more likely than those with high incomes to (1) expect Social Security to be their major source of retirement income, (2) be less likely to own stocks or mutual fund shares, and (3) be renters rather than homeowners. Some of these hypotheses are based on income alone, but others are based on the almost axiomatic relationship between education and income i.e., that persons with more education have higher incomes than those with less education. The income-education relationship also supports further speculation, such as the hypothesis that individuals with higher incomes would be more likely than those with lower incomes to know details about Social Security (e.g., eligibility ages for receiving partial and full retirement benefits).

This fact sheet is based on the Joint Center for Political and Economic Studies National Opinion Poll of African American Adults About Social Security and Wealth. Conducted in late 2005, the poll surveyed 850 African American adults ages 18 and older. With a sample that includes individuals from a range of income levels, the survey findings support the hypotheses stated above. Although 13 percent of the sample (113 respondents) did not provide their incomes, the remaining 87 percent fall with nearly equal frequency at the upper end of the distribution (13 percent have incomes of more than $90,000) and at the lower end (11 percent have incomes of $15,000 or less). Most respondents were in the middle of the distribution, with about half (47 percent) reporting incomes between $15,001 and $60,000. The income categories of $60,001 to $75,000 and $75,001 to $90,000 each account for eight percent of the sample.

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Date published: June 2006