Lack Of Access To Retirement Benefits Impedes Retirement Savings For People Of Color

Black and Latino workers, along with those of other or multiple races/ethnicities regularly have significantly less money in retirement savings than white workers do. This disparity results in a less secure retirement, even though they often work longer hours and careers. The retirement savings gap results, in large part, from many people of color having less access to retirement benefits at work. The overwhelming majority of people – more than 90% — will participate in a retirement plan at work if they are eligible, regardless of their racialized group. Yet, white workers are often more likely to work for employers that offer retirement benefits, and are also more likely to hold stable, full-time jobs that qualify them for these benefits compared to Black and Latino workers, as well as Native Americans, Alaska Natives and Pacific Islanders.

A recent report that I co-authored for the Society of Actuaries summarizes the latest data on retirement savings by race and ethnicity, primarily using data from the Federal Reserve’s Survey of Consumer Finances 2022 (SCF) and the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP) 2021/2022, which show individuals’ retirement savings in 2020 and 2021. The two data sources tell remarkably similar stories. These sources provide a consistent narrative, showing the significant role of employer-sponsored retirement benefits such as a 401(k) plan or a DB pension in the racial retirement savings gap. Differential access to employer-sponsored retirement benefits accounts for approximately half of the retirement savings gap between households with a white householder, on the one hand, and households with a Black and Latino householder, as well as those with a householder of other or multiple races or ethnicities, on the other hand. If Black and Latino workers, as well as workers of other or multiple races, had the same access as white workers to a retirement savings plan at work, the retirement savings gap would be 40% to 50% smaller.