Understanding Trends in Hispanic and African American Retirement Preparedness in the US

Abstract

Retirement income security refers to households’ ability to provide an adequate income stream during the period of their retirement from the labor force. Expected retirement income is based on four components: standard wealth holdings, defined contribution pensions, defined benefit pensions, and social security benefits. Using the Survey of Consumer Finances, I find that Black and Hispanic households made remarkable progress in terms of retirement income, poverty reduction, and replacement rates over 1989-2007. This was followed by a reversal of fortune for Black households over 2007-2019, largely due to an absolute decline in standard wealth, whereas Hispanics generally experienced continued improvement.

Keywords: retirement income, inequality, pensions, discrimination

JEL Classification: D1, J26, J32, P36