New NIRS research examines racial disparities in retirement readiness among working-age Americans and households.
A new report calculates the severity of the U.S. retirement security racial divide. The analysis finds that every racial group faces significant risks, but people of color face particularly severe challenges in preparing for retirement. Americans of color are significantly less likely than whites to have an employer-sponsored retirement plan or an individual retirement account (IRA), which substantially drives down the level of retirement savings.
Retirement Insecurity in the United States examines retirement
readiness racial disparities among working households age 25-64. It
analyzes three key areas – workplace retirement coverage,
retirement account ownership, and retirement account balances.
- Download the
- Read the press release here.
- Read Washington Post coverage of the study here.
- Watch a replay of the webinar here.
- View and download report charts here.
Authored by Nari Rhee, PhD, the key findings are as
Workers of color, in particular Latinos, are significantly less
likely than White workers to be covered by an employer-sponsored
retirement plan—whether a 401(k) or defined benefit (DB) pension.
54 percent of black and Asian employees and 38 percent of Latino
employees age 25-64 work for an employer that sponsors a retirement
plan, compared to 62 percent of White employees.
- These racial disparities are much more pronounced in the private
sector than in the public sector. Blacks, Asians, and Latinos are
respectively 15, 13, and 42 percent less likely than whites to have
access to a job based retirement plan in the private sector, compared
to 10, 9, and 12 percent less likely in the public sector.
- Households of color lag behind white households in coverage by
pensions that guarantee lifetime retirement income. While 24 percent
of white households have a pension through a current job, only 16
percent of households of color do. This disparity is primarily due to
the fact that just 12 percent of Latino households are covered by a pension plan—half the rate of white and black households.
of color are far less likely to have dedicated retirement savings
than White households of the same age. At the same time, coverage
appears to be positively associated with the existence of dedicated
household retirement savings in both groups.
large majority of black and Latino working age households—62
percent and 69 percent, respectively—do not own assets in a
retirement account, compared 37 percent of White households.
- The racial gap in retirement account ownership persists across
- Households with pensions through a current job are more likely
to have dedicated retirement savings in a 401(k) or IRA type account
than households without pensions: 74 percent versus 66 percent,
respectively, among white households, and 52 percent versus 40
percent among households of color.
Households of color have substantially lower retirement savings
than white households, even after controlling for age and income.
- Three out of four black households and four out of five Latino
households age 25-64 have less than $10,000 in retirement savings,
compared to one out of two White households.
- Among near-retirees, the per-household average retirement
savings balance among households of color ($30,000) is one-fourth
that of White households ($120,000).
- Across age groups, households of color with at least one earner
are half as likely as white households to have retirement savings
equal to or greater than their annual income. For instance, only 19
percent of households of color near retirement have this much
retirement savings, compared to 41 percent of white households of the
Retirement Insecurity in the United States serves as a companion to
NIRS’ July 2013 study, The Retirement Savings Crisis: Is It Worse
Than We Think?, which documented a significant retirement savings gap
among working-age households in the U.S.
This research is based on
an analysis of data from the U.S. Bureau of Labor Statistics’
Current Population Survey Annual Social and the Federal Reserve’s 2010 Survey of Consumer Finance and
analyzes data for whites, people of color and—where data
permits—blacks, Latinos, and Asians.
the report here.
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