In the U.S., if a black man and a white woman have identical Social Security earnings histories, they will receive the same monthly Social Security payments until death. That statistically shortchanges the black man because his expected lifespan is shorter. At age 67, a black man’s expected additional years of life is 4.5 years less than that of the white woman. Under equal earnings and a plausible interest-rate assumption, the black man’s Social Security payment stream is worth 26% less than the white woman’s.
The lesser life expectancies of blacks and men are major inequalities. Equal Social Security payments by race and sex ignore systematic mortality differences and exacerbate major inequalities. The health care system should focus on increasing black’s and men’s lifespans. The Social Security system should recognize the extent of the health care system’s failure to do that.
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Data and calculations: how morality differences by race and sex effect the value of Social Security annuities (Excel version)