Impact of Social Security on the Future of the U.S. Latino Population.

An unprecedented and timely national research project that will examine the impact of Social Security on the U.S. Latino population was announced by Dr. Fernando Torres-Gil, lead researcher for the project and director of the UCLA Center for Policy Research on Aging (CPRA). In addition to CPRA, the research collaborative includes the University of Southern California Ethel Percy Andrus Gerontology Center and the UCLA Chicano Studies Research Center. The three lead centers will work in partnership with the National Hispanic Council on Aging and the National Association of Latino Elected and Appointed Officials (NALEO).

“This ‘Latinos and Social Security’ project aims to educate the Latino community as well as society at large about the value of Social Security for the economic stability of aging Latinos,” said Torres-Gil. “Social Security is an essential economic safety net for Latinos. Without it, over half of elderly Latinos would live in poverty but, with it, less than a fifth do. The stakes are high for Latinos and they have to understand that in order to insure their future economic security.”

The two-year research project also released today its first Policy Brief, part of a series of planned policy papers. Entitled “Latinos and the Future of Social Security: A Time to Act,” the Brief, authored by Torres-Gil, notes that research data show that, “Given Latino longevity combined with lower lifetime income, Social Security is a particularly important source of income for Latinos.”

The project’s first Policy Brief also notes that several detailed studies based on actual Social Security records show that during their lifetimes Latinos receive higher average returns on the taxes they have paid into the system than do other workers. It further finds that the recent debate over the privatization of Social Security has a special relevance for elderly and aging Latinos given that “Latinos are especially vulnerable to changes in the Social Security system. Understanding the impact of these changes is essential.”

Major findings show four reasons why Latinos benefit from Social Security:

Lower Lifetime Incomes. Because the Social Security benefit formula is progressive, a worker with low lifetime covered earnings gets proportionally more in benefits from Social Security than a worker with high lifetime earnings. As a whole, Latinos receive lower average wages than the rest of the population. The median earnings for Latinos in jobs covered by Social Security was $22,400 in 2002, compared to $28,000 for all covered workers, or 20 percent lower than the median income for all covered workers. Latinos also have lower average lifetime earnings covered by Social Security than the rest of the population. Lifetime earnings are used in the Social Security benefit calculation.

Longer Life Expectancies:

The Social Security Administration estimates, based on Census data, that Latino men aged 65 in 2004 can expect to live an additional 20 years, compared to 16 years for all men. The Social Security Administration also finds that Latino women aged 65 in 2004 can expect to live an average of 23 years, compared to 20 years for all women. As a result, Latinos can expect to receive Social Security benefits over a longer time period than the general population.

Higher Disability Incidence:

Latinos have a higher probability of becoming disabled and receiving Social Security disability insurance benefits. In its study on minorities and Social Security, the Government Accountability Office (GAO) found that Latinos made up 8.4 percent of its sample (which consisted of covered workers born from 1931 through 1964) but represented 10.1 percent of Disability Insurance beneficiaries.

Larger Families:

Social Security tends to benefit disproportionately those families that have a larger number of children because Social Security provides benefits to the dependent children of retired, deceased, and disabled workers. Latinos tend to have more children per family. As of 2003, the Latino fertility rate stood at 2.8 children per woman, while the national fertility rate was 2.0 children per woman. Due to their higher than average fertility rates, Latino families tend to gain disproportionately from Social Security benefits directed to children.

The Policy Brief also makes three key recommendations:

— Given its distinctive characteristics and demographic presence, the Latino community must be a significant factor in policy debates on the future of Social Security. That has not been the case thus far.
— Further research is needed on the potential impact of proposed changes to Social Security on the Latino community.
— There is an immediate need for greater public awareness about the impact of Social Security on Latinos. The Latino community in particular requires a factual knowledge base in order to understand and determine how Social Security impacts their aging and retirement, and in order to participate in ongoing policy debates.