Older Hispanics Rely on Social Security as Primary Source of Retirement Income

September 19, 2007
Source: PRNewswire-USNewswire via COMTEX

More than half of all older Hispanic Americans would live below the poverty line without Social Security, according to a new report by AARP.

The AARP report analyzed the sources of retirement income for Hispanics age 65 and over, who are twice as likely to live in poverty as all Americans in that age group.

With traditional defined benefit pensions on the decline, and half of the working American population without access to any retirement savings mechanism, Social Security is the only source of income for many older Hispanics.

"Nearly 75 million working Americans do not have a way to save or plan for their retirement," says Gabriela Zabalua-Goddard, editor of AARP Segunda Juventud magazine. "While we, as a country, have made great progress over the last several decades to increase the financial well being of older people, we must do more to increase the financial security of all Americans as we get older. We must develop new solutions that increase financial literacy and opportunities to save, including automating 401(k) accounts and instituting Auto IRA accounts."

It was found that Social Security provides benefits to almost 75 percent of older Hispanics and represents the largest single source of retirement income for this population group. Social Security payments comprise at least half the income of almost 80 percent of Hispanics age 65 and older who receives them.

"These statistics are unacceptable -- we must encourage saving for retirement in addition to the Social Security benefits Hispanics clearly rely on," says Goddard.

Auto IRA legislation has been introduced in the Senate by Senators Jeff Bingaman (D-NM) and Gordon Smith (R-OR). Companion legislation has been introduced in the House by Representatives Richard Neal (D-MA) and Phil English (R-PA).

The bill, focusing on employers with more than 10 employees and that have been in business for at least two years but do not offer a retirement plan for their employees, would facilitate direct-deposit payroll deductions to an IRA at a financial institution. The employer would not have to contribute to such an account, nor would they hold any liability for investment decisions.

For more information about how to save for retirement, apply for public benefits, or this AARP
Public Policy Institute report, please visit http://www.aarp.org.

Source: Market Watch