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
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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