Protecting against uncertain life expectancies

  • Social Security provides a life annuity that protects against outliving resources
  • Longevity insurance is particularly important for Black households and those with less education
  • Wealth equivalence of Social Security retirement benefits is at least as great as lifetime payroll taxes
  • Black households consistently derive more insurance value from Social Security than whites
  • Money’s worth alone does not fully reflect the value of Social Security

Social Security provides a life annuity that protects people against outliving their resources. This longevity insurance is particularly important for Black households and those with less education, who face greater uncertainty around their average lifespans. A study shows that the wealth equivalence of Social Security retirement benefits is at least as great as lifetime payroll taxes, indicating that households generally prefer a world with Social Security. Black households consistently derive more insurance value from Social Security than whites, reflecting the greater longevity risk they face. Money’s worth alone does not fully reflect the value of Social Security, as people also value the insurance protection against running out of money. In short, Social Security is an important equalizer that provides valuable longevity insurance.

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Factuality Level: 8
Justification: The article provides a detailed analysis of the progressivity and value of Social Security, backed by a study. It explains how Social Security provides longevity insurance and its importance for different household types, particularly Black households. The information is supported by data and analysis, making it a factual article.

Noise Level: 7
Justification: The article provides some interesting insights on the progressivity and value of Social Security, particularly for Black households and those with less education. However, it contains some repetitive information and lacks scientific rigor in terms of providing evidence or data to support its claims.

Financial Relevance: No
Financial Markets Impacted: No

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article does not pertain to financial topics and does not describe any extreme events.

Reported publicly: www.marketwatch.com