The Retirement Crisis Facing Blacks and Latinos
Why so many people of color retire poor — and what can be done about it
Nari Rhee, Ph.D., is manager of research at the National Institute on Retirement. She was formerly an associate academic specialist at the University of California Berkeley Center for Labor Research and Education.
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Poverty statistics put this inequity into even starker relief: Blacks and Latinos who are 65 or older are more than two and a half times as likely as whites to live in poverty.
It’s clear that the disadvantages that many people of color face — in access to a decent education, wages and jobs — can ultimately lead to retirement insecurity.
This is because Social Security benefits are tied to lifetime reported earnings, and workers of color are, in general, disadvantaged through low-wage jobs, a higher incidence of disability, higher unemployment (for blacks) and immigration status (for Latinos).
The story isn’t much better when it comes to pensions or retirement accounts. While 54 percent of employed whites work for employers that provide retirement plans, only 45 percent of blacks and 30 percent of Latinos do.
What can be done to ensure that more black and Latino workers are able to retire with enough income for a comfortable and dignified retirement?
One way would be to make it easier for large companies to offer pensions. Momentum is also gathering behind the idea of states or the federal government sponsoring a high-quality, low-cost, professionally managed, portable retirement savings plan for private-sector workers who don't have access to retirement plans through their employers. Workers would voluntarily contribute a small percentage of their earnings to these plans through automatic payroll deductions.
California recently passed a bill moving toward the creation of such a program, the California Secure Choice Retirement Savings Trust. And policymakers in states like Connecticut, New York and Wisconsin are considering similar proposals. Sen. Tom Harkin (D-Iowa) is about to introduce a bill for a universal retirement savings program in Congress.
Many experts maintain that the ideal model for retirement plans should include coverage for all workers and the ability to take your retirement benefits with you when you leave a job, with funding responsibility split between workers and employers.
Data sources and notes: Except where noted, figures are from my analysis of the U.S. Bureau of Labor Statistics and U.S. Census Bureau’s Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC), March 2012, data for calendar year 2011. “Retirees” are individuals age 65 and older who did not work during the reference year. Older individuals in general are age 65 and older. Families consist of related individuals in the same household and single individuals not living with a relative. The race of families was determined according to the race of the head of household or the first person listed in the family in the CPS survey data.
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