Alarming ‘retirement racial divide’ could leave millions of Black elders at risk

AARP pushes for state retirement savings plan to bridge the gap

By Charles Hallman Staff Writer Are working-age Blacks and other people of color preparing themselves for retirement? A new study by the National Institute of Retirement Security (NIRS) claims a “racial divide” exists in establishing retirement savings. The nonprofit NIRS, based in Washington, D.C., released last month “Race and Retirement Insecurity in the United States.” In a press release, report author and NIRS Research Manager Nari Rhee said, “I’m alarmed by the severity of the retirement racial divide. 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. “We find an even worse situation for Blacks, Latinos and Asians,” continued Rhee. “A typical Black or Latino household near retirement [has] zero dedicated retirement savings in a 401(k) or IRA,” noting that those Blacks (averaging $20,000 saved) and Latinos (averaging $18,000 saved) who have saved for retirement are at least five times below the average for Whites (averaging $112,000 saved). The NIRS report also points out: 1) Three out of four Black households have less than $10,000 in retirement savings, compared to one out of two White households. 2) Households of color are far less likely to have “dedicated retirement savings” than White households — 62 percent of Blacks, 69 percent of Latinos, and 37 percent of Whites have no retirement assets. 3) Workers of color are significantly less likely than Whites to be covered by an employer-sponsored retirement plan — Blacks, Asians and Latinos are less likely to have “a (private sector) job-based retirement plan” and

Lowery Johnson Photos by Charles Hallman
Lowery Johnson
Photos by Charles Hallman

less likely to have similar access in the public sector. “We see a lot of disincentive for workers to start saving for retirement,” stated Amy McDonough, AARP Minnesota’s associate state advocacy director, at a January 16 informational sessions for around 30 seniors at Heritage Park YMCA in North Minneapolis. She added that many “Minnesota workers do not have any type of employer-sponsored retirement plan. Even if they wanted to save for retirement through their employer, they don’t [have] access to a 401(k) account — it’s nearly 40 percent of the workers in Minnesota.” AARP is a national non-partisan membership organization for Americans age 50 and older — over 650,000 members are in Minnesota. “A lot of people misunderstand what AARP is all about,” said Lowery Johnson, the former AARP state president. “The thing that AARP has come to realize is America is pretty frustrated with Congress,” continued McDonough. “So in the meantime we have to go local. We have to work at our local levels.” As a result, she told the small group that the state AARP chapter will be pushing a new State retirement savings plan during this year’s Minnesota Legislative session. “We are proposing that the state legislature look into a private-sector retirement option for people who don’t have access to a 401(k) at work,” explained McDonough on the Minnesota Work and Save or “State-K” plan.

Amy McDonough
Amy McDonough

“We are really looking at workers today who are struggling to save for retirement… It would be very low cost to the State, because they already administer a lot of different retirement programs, but it would allow workers to start saving just a little bit every month for retirement. “When you look at the future, you can’t rely on pensions anymore,” said McDonough. “Unless you’re a government worker or a teacher, there really isn’t a [retirement savings] option for most Americans anymore.” AARP Associate State Communications Director Seth Boffeli added that the fears about Social Security are largely unfounded. Social Security can pay full benefits until 2033, he noted — 93 percent of Minnesota seniors (over 678,000) are currently enrolled in Social Security, which accounts for 53 percent of the typical older Minnesotan’s family income and is 78 percent of a typical lower- or middle-income family income. “Our challenge is two parts,” said Boffeli. “One, we have to make sure that people that are on Social Security or [are] close to being on Social Security [are] involved… Our challenge for people in their 30s and 40s is to remind them that [what] they hear [from people], that these programs aren’t going to be there when [they] get old, is just not true.” “There are a lot of us senior citizens who are not aware of what’s going on [with Social Security],” said John Jones, Minneapolis, who was one of a handful of Black seniors in attendance at last week’s AARP meeting. “We should have more of these [meetings] so people can be aware of what’s going on.” “A separate conversation about Social Security solvency” is needed, and not because of seniors, said Boffeli: “Right now the only thing we are talking about doing is finding cash for the deficit. Those conversations do not make for a stronger, more stable Social Security trust fund to better equip the needs of the people who are going to rely on [it]. “These conversations are important for people of all ages,” surmised Boffeli, “because we want everyone to realize that when you start working when you’re 18 or 19, you’re paying into the system and you have a stake in what happens in the system.” When asked if more Blacks should attend sessions such as the one held last week by AARP, Johnson said, “I can’t emphasize that [any stronger]. It is very important that this community gets the information.” “We really enjoy holding events at Heritage Park,” concluded McDonough, “and we want to do more events in the community.”   Charles Hallman welcomes reader responses to To see more stories by Charles Hallman stories click HERE