Social Security myth vs. reality: true or false? African Americans bear the most cost but receive the least benefits.

Social Security isn't just for retired seniors; it also provides protection for workers--and their families--in the event the household breadwinner is disabled or dies. Many people assume that African Americans and Hispanics bear a large portion of the cost of Social Security yet stand to receive little in benefits. That is part myth, according to AARP.

African Americans and Hispanics make up a disproportionately large segment of workers earning low and moderate wages. But as it stands now, Social Security's benefit formula ensures that lower-wage workers and their families receive a higher return relative to their contributions. Thus, the program replaces about 56% of earnings for low-wage workers, 42% for average-wage workers, 35% for high-wage workers, and 30% for those who have consistently earned the taxable maximum.

AARP is likely the most powerful advocate group for people age 50 and older, representing more than 35 million members. Sustaining the solvency of Social Security is at the top of AARP's agenda. "Everybody needs that base," says Marie F. Smith, president of the board of directors. If you haven't had much time to accumulate wealth, "an untimely disability can be devastating. The main thing is that solvency is shared across age groups."

It is true that African Americans rely heavily on Social Security. But Smith says that is primarily because they don't look to other sources, such as public and private pensions, personal savings and assets, or income from a job as their main source of money during retirement. According to an AARP Public Policy Institute study, Social Security provides retirement income to 82.3% of African Americans age 65 and older. Of this group, 52.8% rely on benefits for 90% or more of their income. A bright spot revealed in the report is that the percentage of African American men receiving income from pensions leads all other seniors at 32.0%, corn pared to 30.6% for all races and 19.9% for African American women.

Another hard fact is that without Social Security benefits, the portion of African Americans age 65 and older that fall below the poverty line would increase from 23.9% to 58.2%. Smith adds that many people who have retired are actually trying to re-enter the workforce, sometimes by choice but more often out of financial necessity.

SOCIAL SECURITY IS THE
DOMINANT SOURCE OF INCOME
FOR PEOPLE AGE 65+

                      African Americans   All Persons

Income from
Social Security             82.3%            88.8%

Income from
Private Pensions            24.6%            30.6%

Income from Assets          23.9%            53.0%

Income from
Dividends                    5.3%            22.8%

SOURCE: PUBLIC POLICY INSTITUTE, AARP

Note: Table made from bar graph.

AFRICAN AMERICANS AGE 65+
BELOW OR NEAR POVERTY IN 2002

                             Below 100%    Below 125%     Below 150%
                            Poverty Line  Poverty Line   Poverty Line

African American Men 65+       181.1%        25.3%           34.8%
African American Women 65+      27.6%        38.8%           48.4%
All African Americans 65+       23.9%        33.5%           43.1%
All Persons 65+                 10.4%        17.0%           24.8%

SOURCE: CENSUS BUREAU, MARCH 2003
CURRENT POPULATION SURVEY

Note: Table made from bar graph.