Measuring Racial/Ethnic Retirement Wealth Inequality

Abstract

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Migration, work, and retirement: the case of Mexican-origin populations

“…The authors suggested that this can be explained by the SSA's progressive formula increasing social security wealth of low-income individuals in the post-retirement years, reducing the gap between non-Hispanic whites and Hispanics. Our analysis is supported by Hou and Sanzenbacher (2020), who found that social security wealth provides, on average, a 95% replacement rate (ratio between social security wealth and pre-retirement income) for Hispanic households. Hou and Sanzenbacher (2020) found other types of wealth, such as employer-provided pensions and financial and housing wealth, were more unequal for non-Hispanic whites and Hispanics after retirement, and that this led to financial insecurity in old age for Hispanics.…”

“…Our analysis is supported by Hou and Sanzenbacher (2020), who found that social security wealth provides, on average, a 95% replacement rate (ratio between social security wealth and pre-retirement income) for Hispanic households. Hou and Sanzenbacher (2020) found other types of wealth, such as employer-provided pensions and financial and housing wealth, were more unequal for non-Hispanic whites and Hispanics after retirement, and that this led to financial insecurity in old age for Hispanics. Dettling et al (2017) found that non-Hispanic white homeowners held more home equity than Hispanics and had more diversified asset portfolios, including business ownership, private retirement accounts, and financial savings (stocks, bonds, and mutual funds).…”

Policy Options to Reduce the Black‐White Gap in Retirement Security

“…Social Security is an important asset for most lower‐income families, including many Black people, because it replaces a larger share of preretirement earnings for beneficiaries with limited lifetime earnings than for those with more earnings. Expanding household wealth measures to include Social Security reduces the racial gap in wealth, although differences remain substantial (Hou & Sanzenbacher, 2020; Wolff, 2018).…”

“…Black people are less likely than White people to be married (Johnson, Haaga, & Simms, 2011), which allows households to economize on living expenses; to receive inheritances (Hamilton & Darity, 2010), which can help finance home purchases and fund retirement; and to have access to banks, which facilitates saving (Federal Deposit Insurance Corporation, 2018). Consequently, Black families generally hold much less wealth than White families (Dettling et al, 2017;Hou & Sanzenbacher, 2020;Wolf, 2018). This article documents the financial challenges facing older Black adults and discusses various policy options to improve their financial well-being.…”

Consumer Perspectives on Commercial Pension Insurance Products: Insights and Implications

“…Commercial pension insurance products offer individuals the opportunity to accumulate funds through regular contributions, which are then invested in various financial instruments to generate returns. [2] Upon retirement, these accumulated funds are used to provide a steady income stream, supplementing other sources of retirement income. The appeal of commercial pension insurance products lies in their potential to address the limitations of traditional pension systems.…”