Race, Trust, and Retirement Decisions

Abstract

Using the 2008 National Longitudinal Survey of Youth, this study investigates whether racial differences in trust can explain decisions to consult a financial planner and the variation in accumulated retirement wealth. Black and Hispanics are more likely to report having low trust compared to non-Black, non-Hispanic respondents. The results show evidence that low trust impacts the two outcome decisions of Blacks more relative to non-Black, non-Hispanic respondents. Low trust minimally affects Hispanics relative to non-Black, non-Hispanic respondents as it related to the decision to consult a financial planner and the accumulation of retirement wealth. Marginal effects of Tobit regression analysis show no evidence of racial difference in the effect of a financial planner.

Keywords: race, trust, financial planner, retirement planning, retirement savings