Michael A. Fletcher, Washington Post, December 9, 2013
Fewer than half of blacks and Latino workers have retirement plans on the job, leaving the vast majority of them with no savings designated for their golden years, according to a report to be released Tuesday.
Americans of all races face the growing prospect of downward mobility in retirement, the report said, but the problem is particularly acute for blacks and Hispanics.
More often than not, blacks and Latinos benefit little from the tax breaks and other policy initiatives aimed at bolstering retirement security because they typically have no money to save for retirement in IRAs and other vehicles outside the workplace, according to Diane Oakley, executive director of the National Institute on Retirement Security (NIRS), which conducted the study. In addition, they are much less likely than whites to have defined-benefit pensions, particularly outside of public sector jobs.
“Those are startling findings,” Oakley said. “The typical household of color has nothing saved in a retirement account.”
The report highlights the retirement security problems looming for a nation grappling with serious debt even as an aging population is demanding more services from government.
Meanwhile, a host of state and local governments have been cutting back on pension benefits for public employees, saying they cannot afford their long-term cost.
Such public employee pensions, which typically pay a fixed benefit for life, have been of particular help to African Americans, who make up a disproportionate share of government workers. Similarly, trimming retirement benefits will disproportionately hurt the retirement prospects of black workers, even as they struggle with lower housing values and homeownership rates than whites.
The NIRS report said that among households headed by blacks and hispanics between the ages of 55 and 64, the average retirement savings account balance was $30,000. Among whites on the verge of retirement, it was $120,000. Meanwhile, investment and human resource firms typically recommend that retirees have assets worth anywhere from eight to 11 times their annual wages in order to adequately prepare for old age.