There has been some talk of how African-Americans should be more supportive of personal/private accounts in social security. A main argument used by the proponents of these accounts is the fact that Blacks have a lower life expectancy than other segments of the population. Since Blacks die sooner, the argument goes, they do not enjoy the benefits of social security as long as others due. Therefore, if given the opportunity, they would invest more aggressively and have more retirement income to enjoy before passing away.
It is true that African-Americans have a lower life expectancy than White Americans, for instance. Hearing this stat all by itself my lead to the impression that given two people, one black and the other white, both working for 30 years contributing to Social Security, the black person will not get any benefit from Social Security because they will die before retirement. However, this gap is due in large part to higher infant mortality rates among African-American infants and higher death rates among late teens and twenty somethings in the African-American community. The former pays nothing into the Social Security system and the latter pays very little. The Centers for Disease Control’s National Center for Health Statistics conducted a study entitled “Health, United States 2004.” In its study, it found that the difference in life expectancy between blacks and whites who reach 65 is two years. At 75, the difference is less than one year. Therefore, the two people described above will gain benefits from the system.
Statistics may be used very loosely during this Social Security debate. It is important that they be used in the proper context or a casual listener will be misguided by the loose usage.
The question now becomes, will African-Americans, and indeed all Americans, benefit more from investing in private/personal accounts since a higher rate of return over the old system is guaranteed? The answer may depend on whether higher rates are actually guaranteed.
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