Most black and latino workers have nothing saved for retirement and few have access to an employer-sponsored retirement plan, according to a new report that underscores how racial disparities in the U.S. economy haunt working people through all stages of life.
Just 54 percent of black and asian workers have the option to save for retirement through employer-sponsored plans. For latino workers, the number falls to 38 percent. By contrast, more than six in ten white workers have workplace retirement accounts, the National Institute on Retirement Security (NIRS) reports.
That access gap produces a corresponding disparity in how financially prepared different races are to retire. Sixty-two percent of black working-age households and 69 percent of latino ones hold no retirement account assets whatsoever. The corresponding figure for whites is just 37 percent. When the NIRS analysts looked at simple savings accounts rather than specific retirement funds like 401(k)s or IRAs, the same stark contrasts appeared. Half of all white households have saved more than $10,000 for retirement, but just a quarter of black families and a fifth of latino families have managed to do so. “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),” the report notes.
These disparities mirror other racial inequities in the American economy that threaten to undermine the country’s overall growth. The massive wealth gap between white America and the rest of the country got wider over the course of the recession. The shift from pensions to investment portfolios as the primary method for saving for retirement has exacerbated both overall economic inequality and the racial wealth gap because investment-based plans favor those who already have substantial wealth accumulated.
The NIRS report adds evidence to the argument that lawmakers need to act quickly and aggressively to counter the country’s looming retirement crisis. The majority of Americans are projected to see a significant drop in their living standards when they retire. Most of the country is piling up debt faster than retirement savings. Progressives have begun pressing to expand Social Security, prompting disingenuous pushback from centrist political interests that remain focused on a “grand bargain” budget deal that would trade cuts to retirement benefits for short-term investments in other areas.