Retire on $120 Grand? How About $30K?

Beware the “severity of the retirement racial divide”: Households of color approaching their golden years have socked away on average only $30,000 — about a quarter of what white households have banked.

Retirees in front of their home
National Journal
Stephanie Czekalinsk
Add to Briefcase
Stephanie Czekalinsk
Dec. 18, 2013, midnight

When it comes to re­tire­ment, many Amer­ic­ans are on shaky ground. But minor­it­ies in par­tic­u­lar are much less likely than whites to work for an em­ploy­er who of­fers a a 401(k) or a pen­sion, a new ana­lys­is by the Na­tion­al In­sti­tute on Re­tire­ment Se­cur­ity shows.

Only 38 per­cent of Latino em­ploy­ees en­joy that re­tire­ment be­ne­fit, com­pared with 54 per­cent of black and Asi­an em­ploy­ees and 62 per­cent of whites. The ana­lys­is, based on a re­port by the NIRS re­leased in Ju­ly, ex­am­ines work­ing people and house­holds, span­ning ages 25 to 64.

Nari Rhee, the NIRS man­ager of re­search who au­thored the re­port, said in a news re­lease that she was “alarmed by the sever­ity of the re­tire­ment ra­cial di­vide.” The typ­ic­al work­ing-age house­hold is well be­hind in sav­ing for re­tire­ment, she poin­ted out, but the situ­ation is worse for minor­it­ies.

For blacks, Asi­ans, and Lati­nos work­ing in the private sec­tor, the dis­par­ity is even more pro­nounced. Re­spect­ively, they are 15 per­cent, 13 per­cent, and 42 per­cent less likely than white private-sec­tor work­ers to have ac­cess to a job-based plan. The ra­cial dis­par­ity lessens for pub­lic-sec­tor work­ers, the ana­lys­is shows. His­pan­ic pub­lic-sec­tor work­ers are 12 per­cent less likely than whites to have ac­cess to an em­ploy­er-sponsored re­tire­ment plan; blacks and Asi­ans are 10 per­cent and 9 per­cent less likely, re­spect­ively.

House­holds of col­or are also less likely to be covered by defined be­ne­fit pen­sion plans that guar­an­tee a life­time re­tire­ment in­come: 24 per­cent of white house­holds are covered by a pen­sion, com­pared with 16 per­cent of house­holds of col­or. Black and white house­holds are more than twice as likely as their Latino coun­ter­parts to be able to count on a pen­sion.

The dis­par­ity between white house­holds and those of col­or ex­tends to re­tire­ment sav­ings as well. White fam­il­ies are more likely to have re­tire­ment sav­ings, and they also will have more of it, ac­cord­ing to the re­port.

Nearly two-thirds of work­ing-age black house­holds and nearly sev­en-tenths of their Latino coun­ter­parts do not own as­sets in a re­tire­ment ac­count, com­pared with less than two-fifths of whites. Sev­enty-five per­cent of black house­holds ages 25-64 have less than $10,000 in re­tire­ment sav­ings, com­pared with 80 per­cent of Latino house­holds and 50 per­cent of white house­holds. Among those near­ing re­tire­ment age, on av­er­age house­holds of col­or have one-fourth the sav­ings that white house­holds have: $30,000 and $120,000 re­spect­ively.

People of col­or who have little else to de­pend on be­sides So­cial Se­cur­ity in re­tire­ment are “es­pe­cially vul­ner­able to re­li­ance on pub­lic as­sist­ance and eco­nom­ic hard­ship in old age,” Nari said. She warned that fo­cus­ing on im­prov­ing “the re­tire­ment read­i­ness for Amer­ic­ans of col­or is ab­so­lutely es­sen­tial to solve the na­tion­al re­tire­ment crisis.”

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