Most Americans are ill prepared financially for retirement, but the problem is much more severe among minorities, according to new research by the National Institute for Retirement Security.
The analysis finds that Americans of color are significantly less likely than whites to have an employer-sponsored retirement plan or an individual retirement account, which leads to a much lower level of retirement savings.
Among working-age households, the typical black family has about $20,000 in retirement savings, and the typical Latino household has $18,000 saved. That’s just a fraction of the $112,000 average among white households, which is still an insufficient amount to rely on retirement.
“With little else to depend on besides Social Security when they retire, people of color are especially vulnerable to reliance on public assistance and economic hardship in old age,” said report author and NIRS research manager Nari Rhee. “Our research makes it clear that placing a special focus on improving the retirement readiness of Americans of color is absolutely essential to solve the national retirement crisis.”
Part of the reason for the divide is that workers of color are significantly less likely than whites to be covered by an employer-sponsored retirement plan. Among workers age 25-6, 54 percent of black and Asian employees and 38 percent of Latino employees have a sponsored retirement plan, versus 62 percent of white employees
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