Social Security Benefits Are Only Income for 43 Percent of Retired Latinos, Immigration Reform and Minimum Wage Hike Could Help
The statistics are worrying. Forty-three percent of Latinos depend entirely on social security in retirement, according to one report.
Four out of five Latino households have less than $10,000 in retirement savings, compared to one out of two white households, according to the National Institute of Retirement Security. And being intergenerational and supporting family and extended families can exert strains on these limited funds.
To address all these concerns and provide solutions and advice, Latinos for a Secure Retirement held their annual summit on Wednesday in Washington, D.C.
Three panels discussed protecting low-income seniors from poverty, helping Latinos develop retirement savings, and tips to invest wisely and prepare retirement. The panel discussions were streamed live.
During the panel discussion -- The Social Safety Net: Protecting Low-Income Seniors from Poverty -- it was explained that the social security program keeps 22 million Americans out of poverty.
"It provides basic economic security to almost all seniors. For 2 of 3 seniors it is half their total income, and for 1 of 3 seniors it almost all their income," said Virginia Reno, Vice President of Income Security Policy at the National Academy of Social Insurance.
The program also provides protections for families, disability insurance for workers and life insurance for families if a parent dies.
Of the 22 million recipients, it supports 1 million children of retired, deceased or disabled workers. The program also supports 6 million people under the age of 65 mainly through the disability program and benefits 15 million seniors over the age of 65.
These are benefits based on the amount people earned when working. A worker earning $45,000 during their working life would receive 40 percent in social security payments, approximately $18,000.
The Social Security Act was passed into law during the presidency of Franklin D. Roosevelt in 1935, in the midst of the Great Depression, and was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children. This Act along with others became known as the New Deal.
Social Security is fully funded through worker's contributions until 2033, when it will face a long-term shortfall, with only enough to cover the social security payments for two-thirds of recipients. Congress has started debating ways to circumvent this shortfall, which could mean raising contributions from 6.2 percent to 7.2 percent and benefit reductions for those earning more than $117,000 during their working lives.
The cause for the shortfall, however, is not the retirement of baby boomers -- the largest generation in America's history -- and often cited as a cause of the shortfall.
The problem lies with wages of workers today.
"We've known for a really long time that baby boomers were going to retire and we've known that the tax base had to be large enough to support the baby boomers. Unfortunately the wages of individuals have not been keeping up with productivity. Historically as a worker become more productive they earn more -- that means they will be paying more into the system because our payroll tax contributions are a percentage of our earnings," said Patrick Oakford, Policy Analyst for Center for American Progress.
Oakford says that the ways the country can address Social Security is either by raising taxes or by increasing worker's wages (which will in itself then lead to an increase in social security contributions).
"If wages were raised by 0.6 percentage points, that would decrease the social security shortfall by one third," said Oakford.
Oakford says another domestic policy that would take care of the shortfall is comprehensive immigration reform, which would add $606 billion in social security contributions over the next 30 years.
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