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Retirement NewsEBRI: Racial and Ethnic Retirement Savings Disparities Persist | #retirement | #elderly | #seniors

EBRI: Racial and Ethnic Retirement Savings Disparities Persist | #retirement | #elderly | #seniors


A new analysis of the challenges that Black and Hispanic Americans face in saving for retirement reveals that several hurdles remain in closing the gap with their White counterparts. 

The in-depth report based on EBRI’s and Greenwald Research’s annual Retirement Confidence Survey (RCS) finds that the wealth gap between White Americans and Black and Hispanic Americans remains—even as income rises. 

Lower- and middle-income Black Americans were more likely to report savings of less than $1,000 compared with White Americans. Further, the share with the highest amount of assets ($250,000 or more) was much higher for White Americans than for Black or Hispanic Americans for both middle and upper incomes, EBRI reports in “2021 Retirement Confidence Survey: A Closer Look at Black and Hispanic Americans.”

Of particular importance, Black and Hispanic Americans disproportionately report lower financial resources, and how they feel about retirement and financial security are clearly affected by having lower income, EBRI notes. 

The 2021 RCS was fielded in January 2021 among 3,017 Americans (1,507 workers and 1,510 retirees) age 25 or older. This year’s survey also included an oversample of Black Americans (741 in total) and Hispanic Americans (731 in total), as well as new questions to better understand the challenges these racial and ethnic groups may face in their retirement preparations. The original findings from the 2021 RCS were released in April. 

Confidence Levels

Overall, EBRI reports that Black and Hispanic Americans are more likely to have lower incomes and assets, which historically correlate with lower retirement confidence and related RCS metrics. Not surprisingly, confidence in having enough money to live comfortably in retirement increased with income, but the percentage of Americans being “very or somewhat” confident was not significantly different by race or ethnicity when controlling for income, the report notes.  

For example, for those in the upper income group (annual household incomes of $75,000 or more), 86% of White Americans, 84% of Black Americans and 85% of Hispanic Americans reported that they were confident about their retirement prospects. By contrast, 48% of White Americans, 50% of Black Americans and 46% of Hispanic Americans in the lower-income group (less than $35,000) were very or somewhat confident.

Similarly, confidence in one’s ability to choose the right retirement products or investments for their situation increased with income, but was not significantly different among racial/ethnic groups in each income group. 

Additionally, most Black and Hispanic workers are satisfied with their workplace retirement plans, but Black and Hispanic workers were more likely to say that one-on-one, personalized education would be a valuable improvement to them compared to White workers.

Debt Drags 

Notably, regardless of income, Black and Hispanic Americans were more likely to consider debt to be a “major or minor” problem for their household than White Americans. In the upper income group, 62% of Black Americans and 58% of Hispanic Americans consider debt a problem, compared with only 37% of White Americans. 

Consequently, Black and Hispanic workers and retirees are more likely to say debt is affecting their ability to save for retirement, live comfortably in retirement and save for emergencies across each income group.

Advisors and Personal Connections 

As one might expect, when selecting a financial advisor, the top two criteria across each income and racial/ethnic group are an advisor’s expertise with their specific financial goals and specialization in households with a similar amount of assets. 

However, Black and Hispanic Americans are more likely to say that it is important to have some connection or commonality between them and the advisor. “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,” explains Craig Copeland, EBRI Senior Research Associate and co-author of the report. 

As such, increasing efforts by financial service companies to develop a candidate pipeline to aid in hiring more Black and Hispanic workers in the industry could strengthen the bond between advisors and clients, Copeland notes.  

Family First

The study also found that regardless of income, Hispanic Americans were more likely to agree that it is “more important” to help friends and family now than to save for their own retirement. In the upper-income group, nearly half of Hispanic Americans agreed with this statement, compared with only a third of White Americans. Upper-income Black Americans were also more likely to agree that family is more important. 

In addition, as compared to White Americans, Hispanic Americans in each income group and Black Americans in the lower- and upper-income groups were more likely to say that saving for or paying off a child’s education is reducing how much they can save for retirement. 

Overall, EBRI notes that higher incomes would help, but the issues cited in the study arise even for those already with higher incomes. “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,” notes Lisa Greenwald, CEO of Greenwald Research and co-author of the report. 



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