Group Differences in Income and Wealth in Old Age

1
Group Differences in Income and Wealth in Old Age

• The Role of Public and Private Pensions
• by
• Eric Hamann
• Kim Kelepolo

2
Overview

• Group Differences in Income Wealth
• Private Pensions
• Public Pension Plans
• Women, Minority Americans Social Security

3
Group Difference in Income Wealth

• Inequality is among the older population followed
  by racial and gender lines
• Reasons for Inequality
• lower household incomes
• lower earnings
• fewer dividends
• less income from private and public pensions

4
Factors Associated with Minority Group Status

• 1) A lack of supplemental health insurance to
  cover medical costs that Medicare does not pay
• 2) A greater need for long-term care
• 3) The reliance on Social Security as ones only
  source of income
• 4) A large debt late in life
• 5) A physical or mental disability
• 6) Less likely to have some form of pension

5
Home Equity and Assets, by Race, Hispanic
Ethnicity, and Household Type

• 
  Non-Hispanic Non-Hispanic Mexican
  Other Hispanic
• 
  White Black American
• Single Male or Couple
• Housing equity
• Proportion 0.873
  0.673 0.693 0.552
• Mean 90,151
  54,454 56,846 91,818
• Nonhousing assets
• Proportion 0.995
  0.890 0.901 0.904
• Mean 235,609
  75,539 58,396 142,333
• Unweighted N (4,390)
  (893) (340) (203)
• Single Female
• Housing equity
• Proportion 0.659
  0.453 0.510 0.253
• Mean 77,545
  39,778 53,758 54,963
• Nonhousing assets
• Proportion 0.942
  0.746 0.702 0.630
• Mean 79,202
  42,363 23,298 35,610

6
Private Pensions

• introduced in late 1800s
• main purpose provide retired older workers a
  decent standard of living
• closely tied to ones employment history
• two main forms
• Defined Benefit Plans
• Defined Contribution Plans

7
Defined-Benefit Plans

• Most Common
• Guarantee a set benefit
• Non-transferable
• Legislation protecting defined-benefits has
  emerged
• Favored by many workers

8
Defined-Contribution Plans

• Savings or investments plans privately
  administered
• Employee/Employer both contribute
• No guarantee on future income

9
Public Pension Plans

• Two Main Plans
• Social Security
• Supplemental Security Income (SSI)

10
Social Security

• In the Past
• covered only retired workers over the age of 65
  who have been employed in commerce industry
• Today
• coverage is extended to nearly the entire labor
  force
• benefit age was lowered to 62

11
Social Security Continued

• Beneficiaries
• Complex Program
• Progressive income redistribution
• Regressive financing
• Current Concerns
• funding
• retirement age
• unequal assistance for minorities women

12
Supplemental Security Income

• What is it?
• Welfare Arm of Social Security
• Standardized income to poor and elderly

13
Supplemental Security Income

• Replaced the Old Age Assistance Act
• SSI is financed from general revenues
• A large fraction of individuals who qualify do
  not participate
• 40 or more of poor elderly dont
• Single women minorities are particularly
  dependent upon SSI
• SSI recipients also qualify for food stamps,
  various social services public housing

14
Women, Minority Americans Public Pensions

• Social Security is poorly designed for women
• Many women spend time out of the labor force to
  take care of child and home

15
Women, Minority Americans Public Pensions

• SSI discriminates against the elderly based on
  race and ethnic identity
• Many minorities go from job to job or are
  immigrants who entered the workforce too late to
  collect benefits
• Personal Responsibility Act
• Income Asset Test

16
House Bill 1214 Personal Responsibility Act

• aliens should be denied welfare and that rather
  than relying on public funds they should be
  supported by their families, sponsors or private
  organizations.

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Income and Asset Test

• Includes all income
• Social Security Wages
• Pensions
• Accumulated assets
• Income from investments