Financial planners already know that this country is facing a “retirement crisis,” with a majority of Americans having insufficient assets to provide for the comfortable retirement they dream of. Indeed, the current generation of older workers heads into retirement less financially prepared then the generation before them.
Now we have word from a major new study that the typical household of color in the U.S. has no retirement savings at all.
That is the finding of the National Institute on Retirement Security in its recently released report, “Race and Retirement Insecurity in the United States.” Written by Nari Rhee, manager of research for the NIRS, the study calculates the retirement security racial divide in this country. Every racial group faces risks, the study reveals, but people of color face especially severe challenges preparing for retirement.
“I’m alarmed by the severity of the retirement racial divide,” Rhee said. “It’s well documented that regardless of race, the typical working-age American household is far off track toward accumulating sufficient savings to meet their basic needs in retirement. As we dig deeper into the data, we find an even worst situation for blacks, Latinos and Asians.”
Rhee gives the example of the percentage of workers by race that work for employers who provide retirement savings plans of some type.
“For example, only four out of ten Latinos and about five out of ten Asians and blacks work for employers that sponsor retirement plans, compared to six out of ten white employees. With low access to retirement plans and low wages, what we’re ultimately seeing is little if any retirement savings among people of color,” according to Rhee.
A very disturbing trend
“A few pieces” in this new study have been done by the NCIS before, but this report is the first full look the organization has taken at racial differences in retirement savings and preparedness, Rhee said, adding the results are very disturbing.
“We know there is racial inequality in terms of earnings, but still this notion that two-thirds of blacks and Latino have no retirement savings is fairly startling,” Rhee said.