THE NATIONAL HISPANIC COUNCIL ON AGING (NHCoA)
INSTITUTE ON HUNGER AND POVERTY POLICY
2713 Ontario Rd. N.W
Washington D.C. 20009
(202) 745-2521
(202) 265-1288
FAX (202) 745-2522
E-Mail: NHCoA@aol.com
NHCOA'S POSITION ON SOCIAL SECURITY
Latino Elderly
Elderly Latinos are more dependent on Social Security than others
because they are more likely to be in poverty than non-Latino
elderly. They are also more likely to have been poor prior to old
age than non-Latinos. While the 1990 average poverty threshold
for a family of four was $13,359,2 1 % of Latino households had
incomes below $1 0, 000, compared with 15 % of non-latino households
(Bureau of the Census, 199 1). According to 1990 income figures,
almost three times as many Latino individuals and families (28. 1
%) fell below the poverty line as non-Latino individuals and families
(9.5 %). The poverty rate for Puerto Ricans is even higher (37.5
O/o), and it is expected that rates for newly-arrived immigrants
may face even higher rates of poverty. Of those living in poverty,
over one in every six (1 7.9 O/o) was a Latino, and 4. 1 % of this
group were ages 64 and older.
Latino elderly remain economically vulnerable for a number of
reasons. They frequently face limited employment opportunities in
occupations that provide retirement pensions as a benefit, earn
low wages, experience intermittent employment patterns, and, if
they happen to have participate in a pension program, tend to accrue
limited benefits, if any at all. Only half of American workers are
currently covered by pension plans, and Latinos are less likely
than others to be covered by such plans.
Many Latinos who have worked as farm workers or domestic workers
have not had their Social Security taxes deducted and some may have
paid their contributions, but their employers may not have forwarded
these to the appropriate agency. As a result, some elderly Latinos
may find themselves with limited or no Social Security benefits
after a lifetime of hard work.
Because of factors identified above, Social Security provides many
elderly Latinos with their sole or primary source of income in
retirement. Because of low income throughout their working life,
elderly Latinos may not have been able to accumulate savings and
may depend almost exclusively on Social Security for their retirement
income. The Social Security Administration (1996) reports that,
for 36% of beneficiaries, including many Latinos, benefits represent
between 50 % and 89 % of their income.
Given the inability of many Latino workers to save or depend on
private pension programs for income in retirement and the major
dependence on Social Security as the primary source of income in
retirement, their future income security should not be jeopardized
by eliminating, privatizing or fundamentally restructuring Social
Security. No other program, public or private, offers the protection
of OASDI. While Social Security is adequately financed for the
next 32 years, legislative action needs to be taken to insure that
future generations of elderly Latinos can continue to depend on it
for economic security.
NHCoA Response to Social Security Restructuring Alternatives
- Individual Retirement Accounts (IRAs). Despite the more than 60
years of success Social Security has enjoyed, some groups and
individuals are promoting the concept of replacing part of the
current Social Security program with a system of mandatory individual
Retirement accounts. Although these proposals vary, most would
allow participants to choose how their money is invested, thus
transferring investment risks to individuals. Although privatization
could work well for some, others, such as low-income Latino seniors,
disabled workers, and their families, could be adversely affected
due to a variety of factors such as lack of sophistication about
stock market investments and a higher degree of vulnerability should
their investments fail.
- Taxation of Benefits. Over time, an increasing number of
beneficiaries will have their benefits taxed at the 85 % level
because, unlike most other tax thresholds, the Social Security tax
thresholds are not indexed to take inflation into account. Unlike
the unindexed 1983 thresholds, which were intended to provide income
for Social Security, the thresholds for the 85 % taxation level
are, in essence, a surtax on the elderly. In addition, there are
some recommendations that taxation on Social Security benefits be
increased to 100 percent for higher income beneficiaries. A similar
proposal suggests that 100 percent of social security benefits be
subject to taxation similar to that of private pensions. Proposals
for taxation of all social security benefits similar to how private
pensions are taxed would negatively affect lower income beneficiaries.
- Cost of Living Adjustments (COLAS). Cost of living adjustments
were recomputed for the 1983 amendments to the Social Security Act
to be more in line with expenses of the elderly. COLAS are once
again the targets of those attempting to keep Social Security from
going broke due to the baby boomer increase in the number of
beneficiaries. Some proposals suggest that the COLA be reduced by
l/2 to one percent.
- Social Security and Older Latino Women. Social Security
discriminates against older Latino and other women who are not able
to fully benefit from the program as presently structured due to
intermittent work patterns due to child birth and child rearing,
and to the increased rate of separation and divorce.
- Raising the Eligibility Age for Full Benefits. The eligibility
age for full benefits is scheduled to be raised from age 65 to age
67 gradually over the first 25 years of the next century. Actuarially
reduced benefits will still be available at age 62, but these will
only be 70 percent of full benefits, instead of the current 80
percent. In considering revisions for Social Security, there is
some support for further increasing the eligibility age to 70.
- Increasing Payroll Taxes. One of the easiest ways to raise
revenues to counter future Social Security budgetary shortfalls
will be to raise payroll taxes.
- Benefit Reductions. Some proposals call for a reduction of Social
Security benefits across the board in order to maintain the fiscal
health of the system.
- Social Security Coverage of AD New Workers Hired by State and
Local Governments. Some time ago, states and localities were able
to choose to remain outside of social security coverage, and some
have continued to do so. One proposal that has been introduced to
address the fiscal health of social security is to expand coverage
by including all new workers hired by state and local governments.
- Use of General Revenues to Support Social Security. Some proposals
call for using federal government surplus or general revenues to
provide support for social security.
For further information, contact:
Institute on Hunger and Poverty Policy
The National Hispanic Council on Aging 2713 Ontario Rd., NW
Washington, DC 20009
Phone (202) 265-1288
Fax: (202) 745-2522
E-mail: nhcoa@ worldnet.att.net.
Marta Sotomayor, Ph.D.
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