Social Security and the Racial Gap in Retirement Wealth


Racial and ethnic gaps in wealth are substantial and persistent. The wealth of the typical White household in 2013 was 13 times that of the typical Black household and 10 times that of the typical Hispanic household. Over the past three decades, the gap in wealth between Whites and African-Americans has increased, while the gap between Whites and Latinos has not diminished. Traditionally, wealth is measured as personal assets minus debt, but excludes Social Security wealth. Yet Social Security is a crucial component of most Americans’ financial security in retirement and makes up the vast majority of retirement wealth for most households of color. The gap in Social Security wealth between white households and households of color is substantially less than the gap in holdings of pension and IRA wealth. Public assets like Social Security have unique advantages over private assets, especially for households of color. They provide universal coverage, require mandatory contributions, and provide greater assets to those who need them the most. Social Security reduces the racial gap in retirement wealth, which nevertheless remains substantial, to levels that are much lower than they would be in its absence. A range of Social Security reform options are available to further reduce the gap in retirement wealth.


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