Latino Millennials Need to Get Smart on Social Security Benefits

Posted on 12/23/2021 @ 05:36 PM

Tags: Social Security

By Sindy Benavides, LULAC National CEO

It’s that time of the year where we start to worry about money. The year is ending with high credit card bills because of holiday spending and travel, and in four short months it will be tax time. As an immigrant mother, and Millennial, I understand my generation’s obsession with the daunting financial issues immediately before us, like paying monthly bills on top of high college debt, or trying to save for a first home.

However, in all the focus of now, younger adults often forget to plan for our long-term financial security, and this is especially important for US Hispanics who are often the generation navigating our parents' financial decisions. They are retiring soon, if they haven’t already, and there is a lot of critical information that our parents need to know about Social Security that we can help them understand.

Younger Latino adults need to get smart on programs like Social Security, and fast. The more education we have on how Social Security works, the more helpful we can be in enrolling our grandparents, parents, aunts and uncles, and even ourselves, in this vital program. For Hispanics there is even more urgency because we outlive non-Hispanic whites but have lower income and education levels. This means that our families have less retirement savings, and are more at risk for living in poverty later in life.

A study by the Social Security Agency shows that Hispanics’ self-assessed knowledge of retirement-related financial issues is significantly lower than that of non-Hispanic whites. They feel less knowledgeable about how inflation affects retirement, how much to save for retirement based on longevity, how to invest their retirement money, and how to manage retirement spending. Not surprising, Spanish-speaking Hispanics feel even less knowledgeable than English-speaking Hispanics.

The same study showed that Latinos might have awareness that Social Security exists but they have less knowledge of how Social Security benefits work, which can hurt them if they do not make informed decisions. For example, if my mom doesn’t know that benefits are inflation-indexed and increase with delayed claiming, she could claim her benefits now but will lose a lot of money that she would have earned had she waited to do so. This decision could translate into her not having enough money later down the road in retirement, when she probably needs it most.

If the older members of our families are not empowered with the knowledge on how Social Security works to make optimal decisions, including our disabled family members who get Social Security, the burden of taking care of them will fall on us.

However, we have to get smart first and LULAC urges our community to use AARP’s simple online tools in English and Spanish to learn more. In AARP’s Social Security Resource Center, you can access tools and resources to estimate your family members’ retirement benefits, assess the financial impact of claiming benefits based on age, stay up-to-date on changes to benefits, and get answers to your questions.

I will admit that as a younger worker, I used to cringe when I looked at my Social Security contributions on my pay stub. This is because I, like many new members of the workforce, was not aware of the immediate benefit of the program in life right now. Many young workers do not realize that it is their grandparents’ and parents’ current Social Security checks that might be keeping the household afloat.

Social Security is not a government handout, it is our family member’s hard-earned money and its benefits are felt in our communities every day. If this program did not exist, the onus of taking care of the many needs of the older members of our families would be on us, and that is an expensive, and often impossible, task.

The research on financial literacy tells us that providing Hispanics with information on Social Security benefits will affect their benefit-claiming decisions in retirement planning. But before we put the burden of understanding how the program’s benefits work on the elderly members of our families, Latino Millennials owe it to our families who once took care of us, to get smart on Social Security so we can help them navigate the program, make optimal financial decisions, and in turn, empower ourselves as we plan our own retirement.