NCPA - National Center for Policy Analysis

Blacks Getting Raw Deal On Social Security

February 27, 2001

African-Americans are reaping fewer benefits from Social Security than their white counterparts, primarily because of their shorter life expectancies. That is the conclusion drawn in a new study from the Cato Institute, authored by Michael Tanner.

  • Since African-Americans at all ages and incomes have lower life expectancies than whites, they collect Social Security benefits for fewer years than whites -- despite having paid into the system for the same number of years.
  • The return blacks receive from Social Security are 0.5 percent to 1 percent lower than those whites receive -- translating into a lifetime transfer of wealth from blacks to whites of nearly $10,000 per person.
  • After taking care of other needs and paying 12.4 percent of their income in the form of Social Security payroll taxes, struggling black families seldom have enough money left over to save and invest.
  • This explains why the typical African-American household has a net worth of just $4,500 -- less than one-tenth the figure for whites.

Tanner points out that the issue of Social Security privatization is really a civil rights issue.

Source: Michael Tanner, "Disparate Impact: Social Security and African-Americans," Briefing Paper No. 61, February 5, 2001, Cato Institute, 1000 Massachusetts Avenue, N.W., Washington, D. C. 20001, (202) 842-0200.

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