Hispanics’ Understanding of Social Security and the Implications for Retirement Security: A Qualitative Study

by
Social Security Bulletin, Vol. 77 No. 3, 2017

Hispanics constitute the nation's largest minority group, and the Census Bureau projects the Hispanic share of both the overall and the retirement-age U.S. population to increase substantially in the next three decades. Compared with other racial/ethnic groups, Hispanic adults have the lowest rates of high school and college graduation, are more concentrated in low-wage jobs, and have lower incomes and health insurance coverage. However, Hispanics’ life expectancy is greater than that of other population groups. These trends underscore the importance of effective outreach to Hispanics to improve their understanding of Social Security and to enhance their retirement security overall. In this article, we examine Social Security literacy and preferred ways of receiving information about the program. We assemble focus groups of three ancestries (Mexican, Puerto Rican, and Cuban) and of English and Spanish speakers. We report the differences and the similarities in the results among these ancestry and primary-language subgroups.


Lila Rabinovich is the Director of Policy and Development at the University of Southern California Center for Economic and Social Research East. Janice Peterson is a professor of economics at California State University, Fresno. Barbara A. Smith is a senior economist with the Office of Policy Research, Office of Retirement Policy, Office of Retirement and Disability Policy, Social Security Administration.

Acknowledgments: A previous version of this article was published as University of Southern California Center for Economic and Social Research Working Paper No. 2016-02 (https://cesr.usc.edu/documents/WP_2016_012.pdf).

The findings and conclusions presented in the Bulletin are those of the authors and do not necessarily represent the views of the Social Security Administration.

Introduction

Selected Abbreviations
NCLR National Council of La Raza
SSA Social Security Administration
UAS Understanding America Study

As members of the baby-boom generation reach retirement age, concern is growing about the adequacy of retirement planning and savings in the United States. Although the literature on retirement preparedness suggests that many Americans might face economic insecurity in their senior years (Rhee and Boive 2015; Government Accountability Office 2015; Williams and Jackson 2015), an increasing number of studies suggest that certain demographic groups face particular challenges—and Hispanic Americans are one such group (Hopkins 2014). Those challenges include comparatively low-wage jobs, low levels of wealth, limited health insurance coverage, and longer life expectancies. As a result, Hispanics are at greater risk than the general population of having low levels of retirement savings and, therefore, of relying on Social Security benefits as a major source of retirement income.

Prospective reliance on Social Security income in retirement means that it is important for Hispanics to be informed about program provisions.1 The Social Security Administration (SSA) provides information on retirement benefits in English and Spanish and uses a variety of media to deliver that information to the public. However, such efforts might not adequately inform all Hispanics about their Social Security retirement benefits. After all, the Hispanic community is not homogeneous. According to studies by the Pew Research Center, about 65 percent of Hispanics in America are of Mexican ancestry, almost 10 percent are Puerto Rican, and Cubans and Salvadorans each represent about 4 percent (Lopez, Gonzalez-Barrera, and Cuddington 2013; Krogstad 2016). Among Hispanic Social Security beneficiaries, the three largest ancestry groups are Mexicans, Puerto Ricans, and Cubans, representing 52 percent, 14 percent, and 10 percent, respectively (Martin 2007).

In addition to the cultural differences between Latin American places of origin, these Hispanic subgroups differ in terms of median age, educational attainment, poverty rates, and homeownership rates (Lopez, Gonzalez-Barrera, and Cuddington 2013). Those economic, demographic, and cultural differences might affect not only knowledge about Social Security but also preferred ways of receiving program-related information. We conducted focus-group sessions composed of Mexicans, Puerto Ricans, and Cubans and found differences between those subgroups (as well as between English speakers and Spanish speakers) in knowledge of Social Security programs and benefits and in preferred ways of receiving program-related information.2 Our study is one of the first to research these between-group differences and discuss their implications.

Enhancing Hispanics’ understanding of Social Security is important for the target population and for SSA. For Hispanics, Social Security benefits represent a substantial part of retirement income. The more they know about their benefits, the better equipped they are to make appropriate decisions to ensure a secure retirement. For the agency, the fact that Hispanics represent a significant and growing proportion of beneficiaries (with longer life expectancies than other population groups) has far-reaching implications for program finances. Additionally, intragroup differences in Social Security knowledge and in preferred ways of receiving program-related information will affect how the agency reaches out to Hispanic subgroups.

In the next section, we summarize literature on the retirement savings of Hispanics, the importance of Social Security to their retirement income, and their preferred ways of receiving program-related information. In the following section, we discuss our methodology (including our use of a focus-group questionnaire) and provide descriptive statistics on the focus-group participants. The last two sections present our findings—from both the focus-group discussions and the questionnaires—and discuss the implications of our findings for further research and for potential SSA initiatives.

Background

Hispanics constitute the nation's largest minority group, at 17.6 percent of the population as of 2015 (Census Bureau, n.d.).3 That share is projected to increase to 26.5 percent by 2050 (Census Bureau 2014b, Table 11). Although the median age of the Hispanic population is younger than that of the general population, the Hispanic population aged 65 or older is projected to quintuple from 2012 through 2050. By 2050, the share of Americans aged 65 or older who are Hispanic will exceed 18 percent (Hummer and Hayward 2015, 21). Consequently, the share of Hispanics among Social Security beneficiaries will increase. Compared with members of other racial/ethnic groups in America, Hispanic adults have the lowest rates of high school and college graduation, are more concentrated in low-wage jobs, and have lower incomes and health insurance coverage rates (Hummer and Hayward 2015; Gassoumis, Wilber, and Torres-Gil 2008). Correspondingly, in 2013, the median wealth of a Hispanic family ($14,000) was only one-tenth the median wealth of a white non-Hispanic family ($134,000) (Boshara, Emmons, and Noeth 2015, 7–9). Moreover, during the Great Recession, among all racial/ethnic groups, Hispanics suffered the largest decline in median household wealth (Kochar, Fry, and Taylor 2011). They also saw continued declines in the postrecession recovery; from 2010 through 2013, Hispanics’ median wealth fell by 14.3 percent while that of non-Hispanic whites increased by 2.4 percent (Kochar and Fry 2014).

Despite Hispanics’ lower socioeconomic status, their life expectancy is greater than that of other population groups. Hispanic men aged 65 in 2014 can expect to live to age 85.0, versus 83.4 for non-Hispanic white men; Hispanic women aged 65 in 2014 can expect to live to age 87.4, versus 85.8 for non-Hispanic white women (Census Bureau 2014a, Table 2).4 Higher life expectancy in the context of lower socioeconomic status has obvious and serious implications for retirement security among Hispanics (Gassoumis, Wilber, and Torres-Gil 2008, 3).

Language proficiency varies across the U.S. Hispanic population, as a significant fraction speaks primarily Spanish. According to the Pew Research Center, 36 percent of Hispanics in the United States are bilingual, 38 percent speak mainly Spanish, and only one-quarter speak mainly English (Krogstad and Gonzalez-Barrera 2015). Language preferences vary substantially across first-, second-, and third-generation U.S. Hispanics. Among first-generation families, 61 percent consider Spanish their primary language; that figure falls to 8 percent among second-generation Hispanics and to 1 percent among the third generation (Taylor and others 2012, Chapter IV). As mentioned earlier, the Hispanic community includes individuals of many different ancestries. Knowledge about Social Security may differ across these subgroups and so may their preferences for receiving Social Security–related information.

Hispanics and Retirement Saving

Studies find that Hispanics lag behind the general U.S. population in savings, ownership of financial assets, and workplace retirement benefits. Prudential Research (2014), for example, found that lower proportions of Hispanics reported having a savings account (62 percent versus 81 percent of the general population) and investments such as stocks (8 percent versus 23 percent), bonds (3 percent versus 11 percent), and mutual funds (7 percent versus 20 percent).5 Regarding savings specifically designated for retirement, only 19 percent of surveyed Hispanics had an individual retirement account (IRA), compared with 39 percent of the general population. In addition, 38 percent of Hispanics participated in a workplace-based retirement plan, such as a 401(k), 403(b), or 457, compared with 51 percent of the general population; and 16 percent of Hispanics had a workplace pension plan, compared with 23 percent of the general population (Prudential Research 2014).

Many researchers view the lack of access to a workplace retirement plan as a particularly important reason for Hispanics’ retirement insecurity, as it both reflects and reinforces key aspects of economic disadvantage (National Council of La Raza [NCLR] 2015; Rhee 2013; Sabadish and Morrissey 2013). For example, in an analysis of data from the March 2014 Current Population Survey for California, the NCLR found that Hispanics were more likely than other groups to work for an employer that did not offer a retirement plan. Foreign-born Hispanics were found to face the greatest disadvantage in this regard. The NCLR attributed those findings to the high likelihood that Hispanics are contingent workers, who are typically ineligible for workplace benefits; or that they are likely to work for small businesses, which are less likely to offer retirement plans. Immigrant employment is also concentrated in industries that generally lack employer-provided pensions. In addition, the study found that Hispanics who do have access to retirement plans at work are less likely to participate in them than other groups are. This finding demonstrates the strong links between plan participation and income and wealth—specifically, that Hispanics’ participation in and contributions to employer-provided retirement plans are limited by their low incomes and wealth (NCLR 2015).6

Studies on retirement preparedness suggest that Hispanics may place a lower priority on saving for retirement and that they engage less in retirement planning than do other demographic groups, often because of competing short-term financial goals. For example, Prudential Research (2014) found that 53 percent of Hispanics ranked “saving for retirement” as their most important financial priority, versus 62 percent for the general population. Fourteen percent of Hispanics and 10 percent of non-Hispanics identified “purchasing or owning a home” as their most important long-term goal, and the corresponding percentages for “college tuition for my children” were 11 percent and 9 percent (ING Retirement Research Institute 2012).7

Some commentators emphasize the importance of interpreting findings about Hispanics’ financial priorities and goals in the contexts of economic realities and core cultural values. The Prudential Research study's findings suggest that the importance of retirement planning is “a culturally derived concept” in that “many Latinos still hold on to the value that retirement is a step in life where they will be supported by the children they raised with so much care” (Korzenny 2015).

Other factors that may influence Hispanics’ decisions on saving for retirement (and on building wealth in general) include plans to live outside the United States in retirement and an aversion to debt and risk, which may contribute to a focus on shorter-term financial goals (Prudential Research 2014; Korzenny 2015). On the latter point, Prudential Research (2014) and Wells Fargo (2014)8 found that Hispanics are more financially conservative and risk-averse than the general population, and as a result they are inclined to own fewer financial products.

Hispanics and Social Security

Social Security benefits constitute a significant proportion of retirement income for the Hispanic population. Among Hispanic beneficiaries aged 65 or older in 2014, 42 percent of married couples and 59 percent of unmarried persons relied on Social Security for 90 percent or more of their income (SSA 2016a, Table 9.A3).9 Those percentages are higher for Hispanics than for other groups in large part because Hispanic workers are less likely than other workers to be covered by employer-sponsored retirement plans and because Hispanic households are less likely than other households to have dedicated retirement savings (Rhee 2013). Furthermore, contributions to Social Security are mandatory for those who work in covered employment. Finally, unlike savings in other retirement plans, Social Security accruals cannot be diverted to other uses. This is important because providing financial support to other members of multigenerational Hispanic families, including (for non-U.S. born Hispanics) sending money to relatives in their home country, often competes with retirement saving (Prudential Research 2014).

Hispanics tend to have lower average earnings than do workers overall.10 As a result, the progressive formula that determines an individual's Social Security benefit level tends to help Hispanics because it replaces a larger percentage of preretirement earnings for low earners than it does for high earners. Additionally, with their longer life expectancies, Hispanics benefit from guaranteed Social Security income that is annually adjusted for inflation (SSA 2016b).

There are key differences between population groups in self-reported literacy about Social Security. Surveys have found that confidence in one's own program knowledge is generally lower among Hispanics than among whites and blacks.11 The University of Southern California conducts the Understanding America Study (UAS), an ongoing series of online surveys of American households. UAS survey 16 (UAS16) covers Social Security and retirement literacy.12 In 2015, its Hispanic respondents were more likely than whites to report being “not too knowledgeable” or “not at all knowledgeable” about various aspects of the Social Security program, such as their own full retirement age, whether benefits are adjusted for inflation, and how benefits change based on one's age when they are claimed.13 That divergence is not a recent phenomenon. Surveys commissioned by SSA and conducted by the Gallup Organization from 1998 to 2004 yielded similar findings. In 2001, for example, 68 percent of Hispanics stated that they knew little or nothing about Social Security benefits, compared with 41 percent of whites and 50 percent of blacks. The outcome for Hispanics was up from 62 percent in 1998.

In addition to measuring respondents’ confidence in their knowledge, the 2015 UAS16 assessed their actual knowledge about Social Security. Hispanics scored lower than whites on objective knowledge of aspects of retirement benefits but scored comparably to or better than blacks (Table 1).

Table 1. Percentage of survey respondents with knowledge of selected aspects of Social Security retirement benefits, by race and ethnicity
Aspect Hispanic White Black
Respondent's own—
Early eligibility age for Social Security retirement benefit 28 39 20
Full retirement age for Social Security retirement benefit 13 24 9
What delayed retirement credits are 17 30 17
Whether Social Security retirement benefits—
Are adjusted for inflation 50 65 53
Are affected by the age at which one starts claiming 68 89 65
Must be claimed as soon as the individual retires from work 55 86 67
Whether someone who has never worked for pay may claim benefits if his or her spouse qualifies for Social Security retirement benefits 72 80 63
SOURCE: 2015 UAS16.

The Gallup surveys also included questions assessing knowledge of Social Security program facts, such as the effects on benefits of claiming at different ages and whether benefits are adjusted for inflation. As in the 2015 UAS16, Hispanics tended to score lower than whites.

Hispanics’ relative lack of knowledge about Social Security must be viewed against the background of a low—but growing—confidence in Social Security's future solvency. The Gallup surveys showed that Hispanics were less confident than whites and blacks that Social Security would be there for them in retirement. However, results also indicated that all race and ethnicity groups grew more confident about Social Security's future over the years 1998 to 2004. Surveys by the Employee Benefit Research Institute in 2007 and by MassMutual Financial Group in 2015 found that Hispanics were more likely than the general population to believe that Social Security would be able to pay the benefits to which they would be entitled (Helman, VanDerhei, and Copeland 2007; MassMutual Financial Group 2015). Those surveys documented a continuing increase in confidence in Social Security's future among all groups.

Hispanics and Information on Retirement and Social Security

A lack of financial knowledge and access to information can hinder retirement saving and planning and lower one's financial confidence. Recent studies indicate that a lack of information may pose a particular problem for Hispanics. ING Retirement Research Institute (2012), for example, found that respondents identifying barriers to saving ranked “insufficient income” highest (34 percent of all respondents and 31 percent of Hispanic respondents), followed by “high debt” (24 percent of all respondents and 26 percent of Hispanic respondents). For Hispanic respondents, however, the third-ranked obstacle was “Don't know what my options are”—they saw it as a greater barrier than did other groups (12 percent of all respondents against 18 percent of Hispanics). According to our analysis of 2015 UAS16 data, 70 percent of Hispanic respondents strongly or somewhat disagreed with the statement “I currently have enough information to plan for my retirement,” compared with 60 percent of whites and 65 percent of blacks. Hispanics also were more likely to report being interested in learning more about retirement planning, yet were less likely to report knowing the best sources for retirement information.

When asked specifically about information on Social Security benefits, 65 percent of Hispanic UAS16 respondents reported somewhat or strongly disagreeing with the statement “I have enough information about Social Security retirement eligibility” in 2015, compared with 46 percent of whites and 52 percent of blacks. Similarly, 82 percent of Hispanic respondents reported strongly or somewhat agreeing with the statement “I would like to receive more information from Social Security,” compared with 61 percent of whites and 68 percent of blacks.

The literature on retirement preparedness finds that workers who plan for retirement typically use both informal and formal strategies. Informal planning involves turning to family and friends for financial and retirement-planning advice, while formal planning involves working with professionals such as financial advisors, banks, accountants, or brokers (Sun, Barboza, and Richman 2007). According to UAS survey 26 (UAS26), which covers preferred ways of receiving Social Security information, Hispanic respondents were less likely than were whites to have consulted formal sources of information in 2015 (23 percent versus 36 percent).14 They also were less likely than were whites to have consulted informal sources (28 percent versus 39 percent). Focusing on the different types of informal sources, Prudential Research (2014) found that “family” was cited as the most important source of information on current financial decisions both by Hispanics (39 percent) and by respondents overall (40 percent).

Methodology

We conducted nine focus groups in two locations in the spring of 2015. For each ancestry subgroup (Puerto Rican, Cuban, and Mexican), we recruited for three separate sessions. We held the first six sessions in Miami and the latter three in Los Angeles. We conducted six of the sessions in English and three (one for each ancestry subgroup) in Spanish. (Although participants in the latter sessions spoke primarily Spanish, many of them reported fluency in both languages during the discussions.) Eight of the focus group sessions had nine members and the other had eight members, for 80 participants overall.15

Focus-group discussions covered three broad topics: retirement and Social Security literacy, engagement in retirement planning, and preferred ways of obtaining information about retirement and Social Security benefits. This article focuses specifically on Social Security literacy and preferred ways of obtaining information about Social Security, as these topics may have important implications for program policy. The questions we asked in this qualitative exploration are taken from the 2015 versions of UAS16 (which addresses the former topic) and UAS26 (which covers the latter). Our focus-group findings thus complement those of the UAS Internet panels.

Prior to starting the discussions, we administered a short questionnaire to each participant.16 The paper-based questionnaire covered the main topics described above. Most of the questions were adapted from recent UAS surveys. The goal of the questionnaire was to provide information from each individual that we could compare with the group discussion results and to provide data for intergroup comparisons.

As noted, we recruited 80 participants and distributed them into nine focus groups. We recruited adults aged 25 or older. We screened out retirees but did not place an upper age limit on participation. Participants’ ages ranged from 25 to 65. The age distributions did not differ widely across the three Hispanic ancestry subgroups (Table 2). Puerto Ricans were the most likely to be working and Cubans were the least likely. On average, Puerto Rican participants had the highest educational attainment, while Cubans had the lowest. Cubans also were the least likely to be married and the most likely to be divorced or never married. Mexicans and Puerto Ricans did not differ much in marital status.

Table 2. Focus group characteristics, by ancestry
Characteristic Cuban Mexican Puerto Rican Overall
Number % Number % Number % Number %
Total 26 100.0 27 100.0 27 100.0 80 100.0
Sex
Men 13 50.0 14 51.8 13 48.2 40 50.0
Women 13 50.0 13 48.2 14 51.8 40 50.0
Age
25–39 12 46.2 9 33.3 13 48.2 34 42.5
40–55 9 34.6 15 55.6 9 33.3 33 41.2
56–65 5 19.2 3 11.1 5 18.5 13 16.2
Average age  43.7  42.6  42.4  42.9
Education
High school 10 38.5 7 25.9 4 14.8 21 26.2
Some college, no degree 10 38.5 10 37.0 8 29.6 28 35.0
Associate's or bachelor's degree 5 19.2 8 29.6 10 37.0 23 28.8
Graduate studies 1 3.8 2 7.4 5 18.5 8 10.0
Marital status
Married 8 30.8 11 40.7 12 44.4 31 38.8
Divorced 7 26.9 5 18.5 5 18.5 17 21.2
Widowed 0 0.0 0 0.0 1 3.7 1 1.2
Never married 11 42.3 9 33.3 9 33.3 29 36.2
Civil union 0 0.0 2 7.4 0 0.0 2 2.5
Employment status
Employed
Full-time 15 57.7 19 70.4 21 77.8 55 68.8
Part-time 5 19.2 5 18.5 4 14.8 14 17.5
Unemployed
Looking for work 3 11.5 3 11.1 2 7.4 8 10.0
Not looking for work 2 7.7 0 0.0 0 0.0 2 2.5
Because of disability 1 3.9 0 0.0 0 0.0 1 1.3
SOURCE: Focus-group questionnaire.
NOTE: Rounded components of percentage distributions do not necessarily sum to 100.0.

Results

In this section, we describe the results of the focus-group discussions and compare them with those obtained from the prediscussion questionnaires. As noted earlier, the discussions and the questionnaires addressed Social Security literacy and preferred ways of obtaining information about Social Security benefits. The focus-group discussions revealed misconceptions and concerns that are common among the ancestry and primary-language subgroups while the responses to the questionnaire revealed differences across the subgroups.

These focus-group results should not be generalized to the broader Hispanic population. The number of participants in the focus groups is small and the sample is not a randomly selected subset of the population. Further, observations provided in the focus groups may have been influenced by the opinions expressed by fellow group members.

Social Security Literacy

Regardless of ancestry and primary language, focus-group discussions revealed low levels of knowledge of the way the Social Security system works and the benefits to which participants may be entitled. Among the misconceptions and misinformation about Social Security that the participants expressed were the following:

In reality, retirement benefit claiming ages are the same for men and women. The earliest age at which individuals can claim Social Security retirement benefits is 62. The full retirement age varies depending on year of birth; for example, for individuals born during 1943–1954, the age for receipt of full Social Security retirement benefits is 66.17 Social Security retirement benefits replace about 55 percent of preretirement income for low earners, 41 percent for median-earnings workers, and 34 percent for high earners.18 Social Security retirement benefit amounts are based on the highest 35 years of wage-indexed covered earnings.19 Citizenship is not necessary to receive Social Security retirement benefits as long as individuals (and their employers) have contributed to Social Security during their working years.20 Finally, even if the Social Security trust funds are exhausted in the future, projected worker (and employer) payroll-tax contributions will enable the system to pay about 77 percent of scheduled benefits.21

Most participants agreed that they would find information on their prospective Social Security benefit amount (if entitled) and on their optimal retirement age useful. In the questionnaire, 74 percent said they would find an estimate of their benefits “extremely” or “very” valuable. In addition, many participants said they were interested in knowing more about whether Social Security is expected to be solvent when they reach retirement age, and what would happen with their benefits in the case of insolvency.

Box 1 presents selected remarks that indicate the types of information participants want from SSA. The discussion revealed similar concerns across the ancestry subgroups, and the box highlights four topics of particular interest to them.

Box 1. Types of information Hispanic focus-group participants want from SSA: Selected remarks from members of each ancestry subgroup
Topic Cuban Puerto Rican Mexican
How to prepare for retirement “If you are, for example, self-employed, how can you spend your money or save your money for your future?” “What do I need to do to plan better, or at least to learn and then plan, because we don't know much. I don't know much.” “I would like to have more detailed information about whether [investing] is a good idea or not for me… One may put money somewhere and what if they defraud me?” a
Own future Social Security benefit amount “I want to know about benefits. How much? What will my benefits be?” “I would like to calculate how much I'm going to get, and the other question would be if that's already counting inflation.” “I would like to know how much I need to put in and how much I will get.” a
Claiming age “How it affects [your retirement benefits] if you retire at 65 or 67. How much is that going to affect you?” “I would like to know how it will affect my benefits if I delay my retirement.” “I would ask the same as my colleague here: How old [do I need to be to claim] and how much will I obtain?” a
Program solvency “Will Social Security exist when it comes to the age to retire? Will the future be well enough so they can pay us?” a “If the government defaults or the Social Security defaults, what's going to happen to all of my savings through them? That, I'm very curious [about].” “I'll hear things, like people who are retired they may get their Social Security cut sometimes… I don't know if it's to meet the needs of whoever the retired people are right now…”
SOURCE: Focus-group discussions.
a. Spanish-speaking participant.

Table 3 presents results of the focus-group questionnaire, which measured objective knowledge of the Social Security program with a series of true-or-false statements. It shows that most participants were knowledgeable about the program in general; for example, 75 percent or more knew that Social Security provides disabled-worker and survivor benefits and that benefits are paid for by payroll taxes. Less prevalent was knowledge on specific topics more directly related to their own potential benefits, such as when benefits can be claimed, whether widowed spouses can be eligible for benefits, and whether benefits are adjusted for inflation. In addition, results differ across ancestry and primary-language subgroups—for example, on whether Social Security benefits must be claimed at retirement and whether benefit amounts are affected by claiming age. Nearly all Puerto Ricans (96 percent) knew that benefit amounts are affected by claiming age, versus 70 percent of Mexicans and 65 percent of Cubans. Similarly, 85 percent of English speakers knew that claiming age affects benefit amounts, versus 60 percent of Spanish speakers. Several facts were less well known across ancestry and primary-language subgroups. Less than 62 percent of participants in any subgroup knew that benefits are adjusted for inflation, that benefits need not be claimed at the time of retirement, and that widowed spouses need not be caring for children to claim benefits. Such results on knowledge of specific benefit-related topics raise concerns about the retirement security outlook for many Hispanics.

Table 3. Percentage of Hispanic respondents who correctly identified true-or-false statements about Social Security retirement benefits, by ancestry and primary language
Statement and correct answer Overall Ancestry Primary language
Cuban Puerto Rican Mexican English Spanish
Individuals who never worked can get benefits (true) 70.0 65.4 77.8 66.7 72.2 65.4
Benefit amounts are not affected by claiming age (false) 77.2 65.4 96.2 70.4 85.2 60.0
Benefits are adjusted for inflation (true) 56.4 60.0 50.0 59.3 53.8 61.5
Benefits must be claimed at retirement (false) 46.3 26.9 55.6 55.6 59.3 19.2
Retirement benefits may be subject to income tax if the beneficiary has work or investment income (true) 66.2 76.0 56.0 66.7 71.7 54.2
Benefits are paid for by a tax on employers and workers (true) 79.2 75.0 76.9 85.2 78.8 80.0
Workers can be entitled to Disability Insurance (true) 94.9 92.0 100.0 92.6 94.2 96.2
Survivor benefits may go to children (true) 76.9 76.0 73.1 81.5 76.9 76.9
Widowed spouses must have children to claim benefits (false) 52.6 56.0 50.0 51.9 55.8 46.2
SOURCE: Focus-group questionnaire.

Preferred Ways of Obtaining Information about Social Security

The focus groups discussed the types of Social Security information participants wished to receive, as well as whether they preferred to receive that information from formal sources (such as SSA or financial institutions) or from informal ones (such as family, friends, or colleagues).

Participants discussed their experiences with and opinions about some of the mechanisms used by SSA to provide information to citizens, such as online retirement calculators, the Social Security Statement, and individual online my Social Security accounts. Examples of SSA's online calculators include the Retirement Estimator, the Life Expectancy Calculator, the Retirement Age Calculator, and the Benefits for Spouse Calculator. Only a few people had heard of such tools, and in the questionnaire, only six reported having ever used them. Of those six, most felt that the calculators were valuable instruments, although a few commented on how “scary” it can be to see how much money they are estimated to need to retire comfortably. Those who had not used retirement calculators—whether from SSA or from other sources—seemed interested in learning more about them.

The same was true of my Social Security online accounts, which can be created at SSA's website and enable users to check their Social Security Statement (described below), report an address change, and manage their benefits. Few people had heard of my Social Security, and fewer still had opened their own account. In the questionnaire, only seven participants reported having opened an account; six of them were English speakers.

The Social Security Statement is a benefits and earnings statement mailed out by SSA to eligible workers in selected age groups. It contains a worker's earnings history, estimates of the retirement and disability benefits for which the worker (and his or her dependents) is eligible, and information about the Social Security program. In the questionnaire, only 19 percent of participants reported having received a Social Security Statement. Among those who recalled having received a Statement, most agreed that it is useful. There was, however, some confusion about the frequency with which the Statement is sent and about whether it is sent automatically (and, if not, how to obtain one). For instance, an English-speaking Puerto Rican remarked:

“I remember, they sent you a little brochure … when you started working… I haven't received that in a long time. Maybe they're not sending it anymore. You know what I‘m talking about. It's a pamphlet and it has your name on it.”

Additionally, a Spanish-speaking Cuban observed:

“They used to send you a letter with all the information about your balance. Now they don't send it to you anymore. Now, if you want it, you have to go ask for it.”

A few participants were confused by what they perceived as the inconsistency in whether a given individual received his or her Statement. An English-speaking Puerto Rican commented to another who had received Statements both in Puerto Rico and in the United States:

They [SSA] are shady because they're selective. I've never heard of [the Statement], period. What's the difference [between you and me]? We're Puerto Rican, right?

In some instances, participants were skeptical about the value of the Social Security Statement because of the perceived insufficiency of the estimated benefit levels it contained. A few participants, in fact, reported not even reading its contents. For instance, an English-speaking Cuban said:

I think I may receive something in the mail once a year… When I see the Social Security, I file it away. I don't even look at it. It's like, 'Yeah, right.'”

In the same vein, an English-speaking Mexican participant said:

“I don't even look at it because I got to do what I have to do in order to have enough for myself and anything on top of that will be a blessing. I feel like Social Security is such an unknown.”

Receiving Information from SSA

In the questionnaire, participants were asked “If the Social Security Administration wanted to provide you with educational information about Social Security benefits, what are the best ways for them to make that information available to you?” Participants could select as many options as they wished.

Participants most preferred to receive information from SSA via email, by visiting the SSA website, and via regular (physical) mail (65 percent, 64 percent, and 59 percent, respectively; Chart 1). Although Cubans most preferred regular mail, it was chosen by only a small majority (58 percent; Chart 2). On the other hand, Puerto Ricans resoundingly preferred email (89 percent). Mexicans preferred email and the SSA website almost equally, at 63 percent and 67 percent, respectively. Nearly half of the participants—in roughly equal proportions across subgroups—expressed a preference to receive information via smartphone, although other tech-based methods (such as via software download, text message, and video game) did not strongly appeal to any subgroup. Spanish speakers preferred regular mail more than English speakers did.

Chart 1.
Preferred ways of receiving information on Social Security: Percentages of focus group participants overall
Bar chart linked to data in table format.
SOURCE: Focus-group questionnaire.
NOTES: Participants were permitted to select multiple preferred ways of receiving information.
PSA = public service announcement.
Chart 2.
Preferred ways of receiving information on Social Security: Percentages of focus-group participants, by ancestry and primary-language subgroup
Bar chart linked to data in table format.
SOURCE: Focus-group questionnaire.
NOTES: Participants were permitted to select multiple preferred ways of receiving information.
PSA = public service announcement.

Participants broadly agreed that more information, specifically from SSA, would be welcome. The questionnaire shows that 76 percent of participants trust SSA somewhat or very much to provide them with useful information about planning for retirement, more than report trusting other government agencies (54 percent), private institutions such as banks and investment companies (58 percent), and financial advisors (54 percent; not shown).

Discussion

Our study contributes to the understanding of what Hispanics know about Social Security and how they prefer to receive program-related information. We provide qualitative evidence of the types of questions, concerns, and biases Hispanics have regarding Social Security. We explore whether there are substantial differences among Hispanic ancestry subgroups and between Spanish speakers and English speakers.

In the questionnaire results, we find differences across the ancestry and primary-language subgroups in knowledge of selected aspects of Social Security benefits. For example, 82 percent of Mexican participants knew that survivor benefits may go to children, compared with 76 percent of Cuban participants and 73 percent of Puerto Rican participants. Ninety-six percent of Puerto Rican participants knew that benefit amounts are affected by claiming age, compared with 70 percent of Mexican participants and 65 percent of Cuban participants. These examples also indicate that there is no clear pattern across the ancestry subgroups in program and benefits knowledge. That is, Puerto Ricans (for example) are not the most knowledgeable about each program aspect, nor are Cubans the least knowledgeable. The program-knowledge rankings of the ancestry subgroups vary from one aspect to another. However, a clearer pattern emerges across the primary-language subgroups, with English speakers being more knowledgeable than Spanish speakers on most aspects.

We find that the ancestry and primary-language subgroups were similar in their three most-preferred ways of receiving information about Social Security: email, regular mail, and the SSA website. However, the ranking of those three modes varied across ancestry and language subgroups. Cubans most preferred to receive information about Social Security by mail, Puerto Ricans preferred email, and Mexicans preferred using the SSA website. English-speaking Hispanics preferred receiving Social Security information through the SSA website or email, while Spanish-speaking Hispanics preferred to receive Social Security information through email or regular mail. Other sources, such as webinars, in-person meetings/seminars, information posted in libraries or community spaces, and smartphone applications were less widely preferred. Finally, all three of the ancestry subgroups reported trusting SSA as a source of information more than any of the other sources (financial advisors, other government agencies, banks, nonprofit organizations, and, especially, the media).

One of the aims of this study was to provide insights into the best ways to reach Hispanic groups, to provide them with information on Social Security, and to help them prepare for retirement. Our focus groups revealed both similarities and differences across ancestry and primary-language subgroups in Social Security knowledge and preferred ways of receiving program information. For example, our results suggest that all of the subgroups prefer email, regular mail, and the SSA website—typical information sources. However, the content of the information provided might need to be changed, or the emphasis adjusted, to address the concerns and knowledge gaps we identified across the subgroups. Our findings also suggest that there may be value in increasing Spanish-language outreach, given the apparent knowledge gap among Spanish speakers. With the ongoing growth of the U.S. Hispanic population, further research should explore how best to make important, relevant, and tailored information easily accessible to English- and Spanish-speaking Hispanics—and to those from different cultural backgrounds—to improve their retirement outcomes. These findings, if verified by further research using larger panels of participants selected using procedures that provide a representative sample of the Hispanic population, will be useful to SSA outreach efforts.

Notes

1 The importance of providing Hispanics with information on Social Security was highlighted in a recent report that recommended creating a notification system to ensure that older Americans are aware of their Social Security, Medicare, and pension options (National Hispanic Council on Aging 2015).

2 We use the terms “Mexican,” “Puerto Rican,” and “Cuban” to identify the cultural ancestry of Hispanics legally residing in the United States, regardless of whether they are American citizens or permanent residents or when they (or their ancestors) immigrated to the United States.

3 “Hispanic” is an ethnic origin rather than a racial category; people who are Hispanic can be of any race.

4 The Census Bureau includes Asian and Pacific Islanders with non-Hispanic whites. Measured against whites (excluding Asian and Pacific Islanders), Hispanics at age 65 can expect to live 2 years longer (Hummer and Hayward 2015, 21).

5 The survey was conducted in both English and Spanish from Oct. 20 to Nov. 18, 2013, by GfK Custom Research, Inc. Its 1,023 respondents self-identified as Hispanic, were 25–70 years old, had a household income of $25,000 or more, and had a role in household decision-making. General-population statistics are from the 2010 U.S. Census and from previous Prudential Research surveys.

6 The NCLR also says that lower wealth may explain why Hispanics with retirement accounts are more likely to take early withdrawals or loans against them because of financial hardship, which amounts to a form of account leakage that may reduce retirement security.

7 Conversely, MassMutual Financial Group (2013) argued that Hispanics are more serious about their financial futures and engage in more careful retirement planning than other groups. (See also PlanSponsor 2015.) Forbes Consulting Group conducted the survey for MassMutual in February 2013 via an online questionnaire. Respondents included men and women aged 25–64 who make (or participate in) financial decisions from among 1,337 households with children younger than 18. The study focused on Hispanics with annual household incomes of more than $75,000. Such respondents might be more concerned about (or able to plan for) their financial futures than are those with lower incomes. In 2014, 25 percent of Hispanic households had incomes of $75,000 or more (DeNavas-Walt and Proctor 2015, Table A-1).

8 The Wells Fargo study is based on a nationwide online survey of 528 Hispanic investors conducted June 12–24, 2014. Qualified respondents were nonstudents aged 25–75 who were the primary or joint financial decision-maker in a household with investable assets of at least $10,000. The survey also included a national comparison sample of 530 general-population investors.

9 By comparison, among non-Hispanic white Social Security beneficiaries aged 65 or older, 20 percent of married couples and 41 percent of unmarried persons relied on Social Security for 90 percent or more of their retirement income in 2014.

10 In 2014, the median earnings of working-age Hispanics who worked full-time year-round were about $31,760, compared with $44,000 for all working-age people (SSA 2016b).

11 We use the terms “whites” and “blacks” to refer to non-Hispanic individuals; as noted earlier, “Hispanics” may be of any race.

12 UAS16 is one of two Social Security–related UAS surveys designed and fielded annually. It focuses on what Americans know about Social Security. The other survey, UAS26, focuses on Americans’ preferred ways of receiving information about Social Security. Our study uses the 2015 versions of UAS16 and UAS26. For more information on the UAS, see https://cesr.usc.edu/data_toolbox/understanding_america_study. At the time of the 2015 surveys, the Internet panel comprised about 2,500 participants.

13 Response options to these questions were “very knowledgeable,” “somewhat knowledgeable,” “not too knowledgeable,” and “not at all knowledgeable.”

14 Using Survey of Consumer Finances data, Olsen and Whitman (2007, Table 4) likewise found that Hispanics are less likely than other population groups to use formal advisors for savings and investment advice.

15 Facts 'N Figures—a market research firm that specializes in working with the Hispanic community—recruited our focus group participants, who were paid $100 for attending. We obtained consent during recruitment and again, verbally, at the outset of the group discussions.

16 Participants were given a questionnaire in their primary language.

17 For more information, see https://www.socialsecurity.gov/planners/retire/agereduction.html.

18 For more information, see https://www.socialsecurity.gov/oact/tr/2013/tr2013.pdf (Table V.C7, page 145).

19 For more information, see https://www.socialsecurity.gov/pubs/EN-05-10070.pdf.

20 For more information, see https://www.socialsecurity.gov/planners/retire/applying5.html.

21 For more information, see https://www.socialsecurity​.gov/oact/tr/2013/tr2013.pdf (Figure II.D2, page 12).

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