Social Security is a great equalizer

Abstract

The brief's key findings are: (1) As the U.S. grows more diverse, it is important to understand how much Social Security affects the relative economic status of retirees by race/ethnicity. (2) This analysis uses the Health and Retirement Study to examine Social Security as a share of retirement wealth for whites, blacks, and Hispanics during 1992-2016. (3) Without Social Security, a typical white household has 5 to 7 times the wealth of a minority household, but adding in Social Security reduces the gap to 2 to 3. (4) Social Security has a similar leveling effect across the wealth distribution, but is particularly important for lower- and middle-income households. (5) Social Security reduces inequality because it covers nearly all workers and has a progressive benefit design, making it the most equal form of retirement wealth.