Tidbits from AARP

July 27, 2001

The AARP has released a new report, "AARP Beyond 50: A Report to the Nation on Economic Security," which discusses the financial challenges facing America's elderly. The report contains a number of points relevant to the debate over Social Security reform:

• Social Security provides half or more of income to 60 percent of people over the age of 65. One-quarter of the elderly rely on Social Security for more than 90 percent of their income. And, 17 percent of seniors receive all of their retirement income from Social Security.
• The distribution of wealth among the elderly is highly concentrated. The wealthiest one percent of those over the age of 50 holds one-third of all the wealth owned by that age group. The top 5 percent control half the wealth owned by older Americans.
• The wealth gap between black and white seniors is growing wider. The net worth of the average white American over the age of 50 increased from $112,000 to $161,000 between 1983 and 1998, the net worth of African-Americans in 1998 was only $40,000, up from $25,000 in 1983.

While the AARP opposes individual accounts, it is important to note that privatization could have helped with all of these problems. For example, while traditional Social Security reforms, such as benefit cuts, would hurt those seniors dependent on the program, the higher return from private capital investment would mean higher retirement benefits for younger workers. At the same time, individual accounts would allow workers, especially low-income workers and African-Americans, to accumulate real wealth. (See, for example, "Saving Social Security is Not Enough" and "Disparate Impact: Social Security and African-Americans," by Michael Tanner.)

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