What Is Retirement Savings By Race?


Susan Kelly

Jun 24, 2022

According to the findings of our study, even though half of all Americans are in danger of being unable to maintain the same quality of living they had before retirement, minorities face an even greater chance of being unable to do so. White retirees had a median retirement income of $23,292 in 2019, Black seniors had a median retirement income of $16,863, and Latinx pensioners had a median retirement income of $13,560.

The Historical Roots of the Retirement Wealth Gap

The disparity in retirement savings is partly caused by racial inequalities in earnings and wealth, the availability of employer-sponsored retirement plans, and the inheritance of money. In addition, persons of color, particularly African Americans and Latinx, were hit particularly hard by the Great Recession and had been longing to see improvements in their income and savings for retirement.

The COVID-19 economic crisis is a threat to all savers, but it is likely to impact persons of color and worsen existing inequities negatively. A recent poll indicated that 27 percent of those saving for retirement have either halted or cut down on their efforts.

Workers of Color and Latinx Experience Lower Wages

Employees of African descent and Latinx workers have lower lifetime earning potential due to racial pay inequalities, which are partially caused by institutional racism. This results in a smaller amount that can be saved. Even after considering the variations in education and work experience levels, the average annual salary for white employees is higher than that of black and Hispanic workers. The median earnings of Black workers in 2019 were 14.9 percentage points lower than those of White workers, while the median earnings of Lantix workers were 10.5 percentage points lower.

Differences in the Benefits Provided By Employers for Retirement

A secure lifestyle in one's post-work years may be created by saving money in employer-based retirement plans and receiving a sizeable amount of one's retirement income from Social Security. This is the case for most working Americans in the United States. Regrettably, Black and Latinx employees are less likely to be employed by businesses that give benefits of this kind. In comparison, just 54% of employees who are black and 35% of Latinx employees have access to retirement plans via their place of employment. Nearly two-thirds of white workers have access to these programs, however.

The Effects of the Great Depression on the Economy

The Great Recession, which lasted from December 2007 through June 2009, contributed to a widening of the racial gap in retirement savings by reducing the overall wealth of Black and Latinx families, leaving those households with fewer resources to finance retirement. Since the Great Recession, Black employees' wages and unemployment rates have been slower to recover than those of White workers have been. In addition, the income disparity between black and white employees has widened, with black workers earning. Nine percent less than White workers in 2019, compared to earning10.2 percent less than white workers in 2000.

The Influence That Owning a Home Has

This brings up an important point about the effect of having a property on one's retirement savings. There is a significant demographic divide in the United States between persons of white, black, and Latinx descent in that region. At present, almost three-quarters of white families owned houses, but just five out of ten black or Latino households were homeowners. The homeowner's home equity may be converted into cash in several ways, including the sale of the property, entry into a reverse mortgage, or the establishment of a home equity line of credit, all of which are viable options.

The Disparity in Wealth between Races

Overall, black people in the United States have less wealth than white people due in part to historical and contemporary forms of structural race such as slavery, segregation, redlining, employment discrimination, agricultural land theft, and mass incarceration. These forms of racism have contributed to a lower standard of living for black people. Through the receipt of gifts and inheritances, a person's family wealth may serve as a source of funds to pay for their retirement. Compared to the wealth rise experienced by the median White inheriting family, which was more than $100,000, the wealth increase was seen by the median Black inheriting family was only $4,000.

Differences in Saving For Retirement Be Reduced

It reduced the number of employees who lack access to retirement plans and increased the number of workers who do have access to retirement plans. This might be accomplished by giving financial incentives to businesses willing to set aside money for their employees' retirement or by establishing a public alternative for retirement savings accounts.

Last but not least, the disparities in retirement savings between Black and Latinx seniors render them more reliant on Social Security. The Social Security Administration found that in 2019, 45 percent of senior citizens of African-American and Latinx descent claimed Social Security as their only retirement income, compared to 39 percent of senior citizens of White descent.


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