A Racial Divide in Retirement Planning
New study finds minorities are even less prepared to retire on time
The National Institute on Retirement Security released a study in December that found Americans are remarkably underprepared for retirement. Even more troubling, the study reveals a significant gap in the level of preparedness between people of color and white households.
“It’s well documented that regardless of race, the typical working-age American household is far off-track toward accumulating sufficient savings to meet their basic needs in retirement,” says report author and NIRS manager of research, Nari Rhee. “As we dig deeper into the data, we find an even worse situation for blacks, Latinos and Asians.”
While no ethnic group can really be seen as ready for retirement, the average white household has at least some retirement savings to rely on when the time comes. More than 53 percent of white households take advantage of retirement options through their employers, such as a 401(k). Only 36 percent of white households have no retirement savings at all.
By contrast, less than 47 percent of Asian households and less than 44 percent of black households use employer-backed retirement options. Latinos trail significantly behind, with less than 30 percent using these assets. Even more startling, more than 62 percent of all non-white households have no retirement savings whatsoever.
The truth is that most Americans aren’t ready for retirement. If you don’t plan ahead, there’s a very real potential that you’ll have to work through your retirement or rely on government assistance that may not provide for all of your needs.
Consolidated Credit offers these tips for effective retirement planning:
- Commit to saving at least 5 percent of your income for both short-term and long-term savings, such as retirement.
- If you have a retirement option though your employer, such as a 401(k), take advantage of it!
- Consider diversifying your retirement assets with a private retirement account, such as a traditional or Roth IRA.
- Don’t just contribute and hope your money will grow. Familiarize yourself with your savings interest rates, as well as how and where your money is being invested through your retirement accounts.
- Even if you can take money out of an account without any penalties, avoid withdrawing any of the money you’ve put away for retirement.
You can find more tips on how to prepare for your golden years, through Consolidated Credit’s Retirement Planning section.