Rhee: Race and Retirement Insecurity in the United States

From the Introduction:

American workers and families face a retirement crisis in which a majority of households are at risk for downward mobility in retirement, and a significant share face not being able to meet basic expenses in old age. In July 2013, the National Institute on Retirement Security (NIRS) released “The Retirement Savings Crisis: Is It Worse Than We Think?” The study found that private sector retirement access is near its lowest point since 1979, with only 52 percent of employees in jobs that offer retirement benefits. A critical finding of that report is that while households face a growing retirement savings burden, the typical US working-age household has only $3,000 saved in retirement accounts, according to 2010 data. The typical household nearing retirement has only $12,000.

This report serves as a companion to the July 2013 study. We examine racial disparities in retirement readiness among workers and households that are working-age, defined in this report as age 25-64. Findings are based on analyses of data from the U.S. Bureau of Labor Statistics’ Current Population Survey Annual Social and Economic Supplement (CPS ASEC) and the U.S. Federal Reserve’s 2010 Survey of Consumer Finances (SCF). Specifically, this paper analyzes:

• Workplace retirement coverage among white, Black, Latino, and Asian wage and salary employees between the ages of 25 and 64 (Section I).

• Retirement account ownership among working-age households, by race of head of household: white and nonwhite and, where adequate data is available, Black and Latino households (Section II).

• Retirement account balances among white, Black, and Latino households; and ratios of account balances to income among white and nonwhite households (Section III).

A key finding is that people of color face particularly severe challenges in preparing for retirement. Every racial group faces significant risks when it comes to retirement income. People of color, however, are less likely than whites to have access to a pension or 401(k) at work. The racial disparity in retirement savings is even greater. In fact, nearly two-thirds of households of color do not have any savings in a 401(k) or IRA type account, compared to slightly over one-third of white households. Three out of four households of color have retirement savings less than $10,000. Among households of color with retirement account assets, the median balance is $30,000 for near-retirees—grossly insufficient as an income source. Finally, the wide racial gap in retirement assets holds even after accounting for age and income.


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