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Social Security Outcomes by Racial and Education Groups

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  • Liqun Liu
  • Andrew J. Rettenmaier

Abstract

This article evaluates the Social Security outcomes for different racial and education groups. Outcomes differ across groups due to the interactions between group‐specific mortality risks and lifetime earnings, the benefit formula, and the benefit package, which includes life insurance, spousal benefits, and retirement pensions. Based on either the rate of return or present value, individuals with less education fare better than those with higher educations. This holds even before accounting for preretirement survivors' benefits, which, when accounted for, reinforce this finding. Single whites do considerably better than single blacks when outcomes are compared by internal rates of return. Accounting for survivors' benefits reduces regressivity, but blacks continue to fare worse than whites. In contrast, based on present values, whites generally do worse than their respective counterparts.

Suggested Citation

  • Liqun Liu & Andrew J. Rettenmaier, 2003. "Social Security Outcomes by Racial and Education Groups," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 842-864, April.
    • Handle: RePEc:wly:soecon:v:69:y:2003:i:4:p:842-864
    DOI: 10.1002/j.2325-8012.2003.tb00536.x
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