The debate over Social Security reform is vital to all Americans,
but no group has as much at stake as do African Americans. To
start with, African-American seniors are disproportionately depen-
dent on Social Security for their retirement income. Three of four
older African-American households rely on Social Security for half
or more of their retirement income. Over a third of older African
Americans rely on Social Security for all of their income. ¹ As a result,
they would be among the people most affected by Social Security's
looming financial crisis and the potential reduction in benefits that
could result.

In addition to the Social Security system's coming problems, Afri-
can Americans face distinct problems and disadvantages under the
current system. Because lifetime Social Security benefits are so
closely related to the length of life, African Americans, who have
shorter life expectancies, are left at a disadvantage, receiving a far
poorer rate of return on their taxes than do comparable whites.

Social Security also contributes to the growing wealth gap between
blacks and whites. Because Social Security taxes squeeze out other
forms of saving and investment, especially for low-income workers,
many African Americans are unable to accumulate real wealth. And,
since Social Security benefits are not inheritable, that wealth inequity
is compounded from generation to generation.

Any Social Security reform should take into account the needs
and circumstances of African Americans. Such frequently discussed
reforms as raising the retirement age, reducing benefits, or increasing

Originally published as Cato Institute Briefing Paper no. 61, February 5, 2001, and updated
to reflect current information.

-147-