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Retirement Planning > Saving for Retirement

Black and Hispanic Americans Face Extra Retirement Planning Challenges

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What You Need to Know

  • Black and Hispanic Americans across income groups were more likely to have lost a job or taken a pay cut due to the pandemic.
  • They are also more likely than white Americans to prioritize paying for a child's education over saving for retirement.
  • Black and Hispanic Americans are more likely than whites to look for a financial advisor with whom they have something in common.

In preparing for retirement, Black and Hispanic Americans face more challenges that white Americans, including having taken a bigger economic hit from the pandemic, according to a new report from the Employee Benefit Research Institute and Greenwald Research. 

The two groups disproportionately report lower financial resources, and how they feel about retirement and financial security is clearly influenced by having lower income, the report said.

The report is based on an online survey conducted January among 3,017 Americans 25 and older, equally divided between workers and retirees. This year’s survey also included an oversample of 741 Americans who identified themselves as non-Hispanic Black and 731 who identified as Hispanic to allow for a closer analysis of the challenges that they face in saving and preparing for retirement.

Researchers identified three income groups: lower, earning $35,000 or less annually; middle, $35,000 to $74,999; and upper, $75,000 or more.

The study’s examination of key demographic differences included that Black and Hispanic Americans are likelier to have lower incomes and assets, which historically correlate with retirement confidence.

In fact, the report said, confidence in having enough money to live comfortably in retirement increased with income, and the percentage of Americans being very or somewhat confident was not significantly different by race or ethnicity when controlling for income. 

For example, for those with annual household incomes of $75,000 or more, 86% of white, 84% of Black and 85% of Hispanic Americans reported that they were confident about their retirement prospects. 

By comparison, in the lower income group, those with less than $35,000 of annual income, 48% of white, 50% of Black and 46% of Hispanic Americans were very or somewhat confident.

Debt and Pandemic Effects

Black and Hispanic respondents were likelier than their white counterparts to consider debt to be a problem for their household, regardless of income. 

In the upper income group, 62% of Black Americans and 58% of Hispanic Americans said debt was a problem, compared with 37% of white Americans. As a result, both workers and retirees in those two groups were more likely to say debt was affecting their ability to save for retirement, live comfortably in retirement and save for emergencies across each income group.

Three in 10 Americans, regardless of income, reported that their households had experienced a negative income or job change since Feb. 1, 2020. 

Black Americans with lower and middle incomes and Hispanic Americans in all three income groups had higher likelihoods of experiencing a negative income or job change than did white Americans, with about 40% of Hispanic Americans in the lower and upper income groups having a negative change since Feb. 1, 2020.

Family and Friends First

Hispanic Americans, regardless of income, were more likely to agree that it is more important to help friends and family now than to save for their own retirement. Nearly one-half of Hispanic Americans in the upper income group agreed, compared with only one-third of white Americans. Upper income Black Americans were also more likely to agree that family is more important. 

In addition, Hispanic Americans in each income group and Black Americans in the lower and upper income groups were likelier than white Americans to indicate that saving for a child’s education or paying off a child’s education reduces how much they can save for retirement. 

“Many Americans, but perhaps especially Black and Hispanic Americans, would benefit from increased assistance in balancing competing financial priorities, such as debt reduction, supporting family, and their own long-term savings,” Lisa Greenwald, chief executive of Greenwald Research and co-author of the report, said in a statement.

Financial Advisors With Shared Experiences

Survey respondents across each income and racial or ethnic group cited two main criteria in considering or selecting a financial advisor to work with: an advisor’s expertise with their specific financial goals and specialization in households with a similar amount of assets as most important. 

After that, significant differences across races or ethnicities on important criteria appeared. 

“Hispanic and Black Americans are more likely to say that criteria where some connection or commonality between them and the advisor exists is important,” Craig Copeland, EBRI’s senior research associate and co-author of the report, said in the statement. 

“This includes working with an advisor who has had a similar upbringing or life experiences as them, using an advisor who is affiliated with their employer in some way, accessing an advisor that has a similar racial/ethnic background to them, and collaborating with an advisor who is the same gender as them.” 

Copeland said financial services firms could strengthen advisor-client relationships by developing a candidate pipeline to aid in hiring more Black and Hispanic workers in the industry.

Other Findings

Most Black and Hispanic workers in the survey expressed satisfaction with workplace plans. However, both group were likelier than white workers to say they would find one-on-one, personalized education a valuable improvement.

The report noted that many Americans are retiring earlier than expected, but the survey found that the reasons differ across ethnicities. White retirees said they could afford to retire earlier than planned most often, while Black and Hispanic retirees most often cited a health problem or disability as the main reason for leaving the workforce early.

Workers universally overestimate the likelihood of working for pay in retirement, according to the report. Indeed, the survey found that about three-quarters of workers across races/ethnicities expected to work in retirement, whereas only about 30% of retirees were doing so.


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