Jun 3, 2007
Does Social Security Discriminate?
The current social security bases its benefits on past payments. Two people who have paid in similar amounts to social security will receive similar benefits. Since total benefits received, ceteris paribus, depend on how long you live, life expectancy plays a large factor into how much you get.
At age 65, white women can expect to live to about 85, white men 83.5, black women 82, black men 80. Because of these differences, white women receive about 33 percent more than black men ceteris paribus. This seems unfair. Like most annuities social security should be based on expected values. People who pay the same amount into the system should expect to get the same amount out – otherwise we are discriminating.
M Good point, but it would be costly to be fairer. Many Union pension plans are based on the same system. The benefits you derive are directly related to life expectancy. This is also true in NYC with the NYPD. Retirement after 20 years and extends at half pay for the rest of your life; could be 40 more years. BB
Actually, that is not true. The cost of being fair are minimal if existent at all. All that is needed to end the discrimination inherent in social security’s current structure is to allow an individual to use his ‘accumulated saving’ to buy an annuity from an insurance company. This allows the insurance company to use its own best estimates of the person’s life expectancy. The total cost to the government does not change, but minorities will no longer be short changed by the system.