The Social Security Debate and Black America
|How the Current Social Security System Rips Off African-Americans Privatization Can Work for Us
published in the
November 2000 - April 2001 print issue
|Social Security, Financial Planning and You
published in the
May 2003 - October 2003 print issue
The average African-American earning middle income wages for the next 50 years is likely to pay more than $700,000 in Social Security taxes. However, at retirement, these wage owners can only expect to get about $140,000 from the system in payments.
A sizable number of African Americans tend to save less for retirement than other Americans. They often do not have a large amount of money remaining after taxes to nest away. As such, elderly African Americans are much more likely to be totally dependent on Social Security for retirement income. One result is that the poverty rate among elderly African American women is 29%, almost twice the rate for all women.
Under the current system, you can believe that the situation is dire for African American males. African American males generally enroll in college at a lower rate than the rest of the population and tend to enter into the workforce at an earlier age. As such, they begin to pay into the retirement fund at a far younger age than other Americans.
The life expectancy of African Americans, on average, is lower than other groups in the country. It is especially low for African American males. When an African American man reaches age 65, he is expected to live another 13.9 years. That is almost two years or 24 monthly Social Security payments less than a White male.
The current social security system depends upon younger workers to pay into the system. Their contributions provide the necessary funds for the system’s beneficiaries. By 2025, experts project that the number of people 65 and older will rise by 75%. The projected growth in the number of workers is only 12%. The view that the forecasted bankruptcy of the current social security system is a myth also clearly contradicts the projections of the Social Security Board of trustees.
Various congressional reports project that Social Security will be able to cover all scheduled benefits through about 2032. The Disability Insurance trust fund is projected to be exhausted in 2019, while the Old Age Survivor and Insurance trust fund would run dry in 2034.
As African Americans, we are in a position to benefit greatly from proposed Social Security privatization options. The proposed options would allow Americans to reduce their Social Security taxes and place the savings into an investment that they choose for their golden years.
A private retirement account option can arm us with the freedom to improve upon and control our futures. Unlike Social Security accounts that dry up at death, they will be assets passable to the next generation, thus becoming an avenue for wealth creation. This will in turn arm the next generation with more financial stability that has eluded the majority of African American families.
|For many of us, financial planning holds a position of prominence on our proverbial “to-do-lists.” In light of this, it is reassuring to know that Social Security is working behind the scenes to help us build a healthy financial future for ourselves. |
Recently, a Gallup survey found that many African-Americans had little knowledge of the Social Security program. That rate of understanding needs improving, considering that Social Security is the only source of retirement income for 40 percent of elderly African-Americans.
Social Security’s data shows that, if not for their monthly Social Security check, the poverty rate among that group would jump from 24 to more than 60 percent. The Social Security system is progressive. That means it returns a greater percentage of earnings to a lower-wage person than to a higher-wage person.
According to the U.S. Census Bureau, Blacks earn about 80% of what Whites earn. Therefore, African-Americans receiving any type of Social Security benefit are more likely to receive a higher percentage of their pre-retirement earnings than Whites.
In addition, 23 percent of the children receiving Social Security Survivor Insurance benefits and 21 percent of disabled workers - between the ages of 30 and 39 - that receive Social Security Disability Insurance benefits are African-American. Including Retirement, Survivor, and Disability, there are five basic programs that make up the Social Security program that you should be aware of when planning your financial future:
1. Retirement Insurance benefits - You must be at
least age 62 to qualify for benefits.
2. Survivor Insurance benefits - You can begin
receiving benefits at age 60 if you have not
remarried; or at any age if you have a minor -
under age 16 - or a disabled child of your deceased spouse in your care; or between the
ages of 50 and 60 if you are disabled and have
Children qualify until they are 18 (19, if still in high school) and can continue to receive benefits, if a disabling condition began before age 22. The average monthly payment for a Social Security Survivors benefit to a widow(er) and two children is approximately $1,927.00.
3. Disability Insurance benefits- You can receive
benefits as long as you meet Social Security’s
disability guidelines. The benefit amount for a
person that has had average earnings, and has
a spouse and two children is approximately
4. Medicare - Entitlement begins age 65; at any
age if you are entitled to Social Security
disability benefits for 24 months; if you have end
stage renal disease; or suffer from ALS (Lou
5. Supplemental Security Income - You must be
either 65, blind, or disabled, and meet certain
income and resource requirements.
Social Security is an integral part of our community. Becoming more familiar with the program or at least knowing how to access the system can be beneficial to you and our community’s financial security.
Williams is President and CEO of Black America’s Political Action Committee (BAMPAC). BAMPAC (202-785-9619) is a nonpartisan federal Political Action Committee (PAC). Founded in 1994, BAMPAC is currently the largest minority PAC in the nation and is committed to promoting the message of limited government, the sanctity of human life, excellence in education, economic self-empowerment, improvement of the moral climate in the country as well as highlighting the importance of the African American vote.
Jenkins is a Social Security Public Affairs Specialist in Columbia,
South Carolina. For additional information call 800-SSA-1213
(772-1213) or visit Social Security,
where you can file a retirement claim,
update direct deposit information, replace a Medicare card, request a
copy of past earnings, and access many other services. There is
section specifically for women, and for state and local employees