TY - RPRT T1 - Social Security Is a Great Equalizer Y1 - 2020 A1 - Wenliang Hou A1 - Geoffrey T. Sanzenbacher KW - Social Security AB - As the U.S. population becomes more diverse, it will be increasingly important for policymakers addressing Social Security’s solvency to understand the extent to which various racial and ethnic groups rely on Social Security versus other sources of retirement wealth. Yet, to date, studies on retirement wealth have tended not to focus on race and ethnicity and have largely ignored the role of Social Security. This brief, based on a recent paper, uses data from the Health and Retirement Study (HRS) to document the retirement resources of white, black, and Hispanic households at various points in the wealth distribution for five cohorts of 51-56 year olds between 1992 and 2016. The discussion proceeds as follows. The first section explains the calculation of retirement wealth. The second section shows how Social Security reduces retirement wealth inequality by race and ethnicity for typical households in each cohort. The third section looks at the impact of Social Security on retirement wealth inequality across wealth quintiles in a single year. The fourth section shifts from wealth to income to examine replacement rates – the ratio of projected retirement income to pre-retirement earnings. The final section concludes that, as policymakers consider changes to bring Social Security into fiscal balance, the distributional impact of any benefit cuts with respect to minority groups may be worth considering. PB - Center for Retirement Research UR - https://ideas.repec.org/p/crr/issbrf/ib2020-2.html ER - TY - RPRT T1 - Social Security and Total Replacement Rates in Disability and Retirement Y1 - 2017 A1 - Khan, Mashfiqur R. A1 - Matthew S. Rutledge A1 - Geoffrey T. Sanzenbacher KW - Consumption and Savings KW - Disabilities KW - Retirement Planning and Satisfaction KW - Social Security AB - Social Security provides higher replacement rates to disability insurance beneficiaries than retired beneficiaries. This fact reflects two factors: 1) Disability Insurance (SSDI) beneficiaries have lower career earnings, and Social Security benefits are progressive; and 2) SSDI benefits are not reduced for claiming early. This project uses the 1992-2010 waves of the Health and Retirement Study (HRS) linked to Social Security Administration earnings records to decompose the differences between the Social Security replacement rates for retired worker and SSDI beneficiaries into these two factors. The project also examines how the total replacement rate – which accounts for other sources of income in addition to Social Security – differs between retirees and SSDI beneficiaries to capture the difference in overall retirement security between the two groups. The results indicate that about half of the 10-percentage-point advantage in Social Security replacement rates for SSDI beneficiaries is due to the actuarial adjustment applied to retirement benefits, implying that career earnings are not that different between retired workers and SSDI beneficiaries. But total replacement rates are substantially lower for SSDI beneficiaries, which indicates that, despite Social Security’s vital role in providing a reliable income source, SSDI beneficiaries have much lower post-career well-being than retired workers. JF - Working Papers PB - Center for Retirement Research at Boston College CY - Chestnut Hill, MA UR - http://crr.bc.edu/working-papers/social-security-and-total-replacement-rates-in-disability-and-retirement/ ER -