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Social Security and People of Color

Social Security is especially important to people of color because they are less likely than white Americans to have pensions or retirement savings. Also, African Americans and Hispanic Americans have higher disability rates and lower lifetime earnings, and therefore benefit from Social Security's progressive benefit formula and its disability and family benefits.

About half (49.7 percent) of all American families owned retirement accounts, such as Individual Retirement Accounts, 401(k) plans and related savings in 2004. White families were more likely to own these accounts (56.2 percent), than were African American families (32.5 percent) or Hispanic families (25.3 percent). For those who owned accounts, the median values were lower for African American families ($15,000) and Hispanic families ($15,000) than for white families ($41,000).

Of Americans age 65 and older, people of color are less likely than whites to have income from private or government employee pensions to supplement Social Security. Such pensions were received by 42.6 percent of whites, 31.0 percent of African Americans and 19.8 percent of Hispanic Americans aged 65 and older in 2008. Social Security is the sole source of income for 43 percent of Hispanics, 40 percent of African Americans, and 33 percent of Asian and Pacific Islanders, as compared to 19 percent of whites aged 65 and older.

Because people of color generally earn less than whites, they benefit from Social Security's progressive benefit formula, which replaces a higher percentage of pre-retirement earnings for low-wage workers.

Social Security's survivor and disability benefits are important sources of income security for many people of color. Because African Americans have lower life expectancy and higher disability rates before age 65 as compared to whites, they are more likely to receive Social Security disability and survivor benefits.

In 2008, African Americans were 12.7 percent of the United States population between the ages of 20-64, and 17 percent of all disabled-worker beneficiaries in the same age group. African American children accounted for 14 percent of all U.S. children (under age 18) and 18 percent of all children receiving survivor benefits, 21 percent of all children of disabled-worker beneficiaries, and 19 percent of all children of retired workers receiving benefits.

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