Got a Retirement Plan? Race Plays a Role

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The following statistic will sound familiar since I use it regularly: about half of U.S. workers are not saving enough and may see their standard of living drop when they retire.

A major culprit in this poor state of preparedness is that millions of Americans at any given moment don’t have a traditional pension or 401(k) savings plan at work.

A new study takes a close look at who these people are and shows stark differences along racial lines. A large majority of Hispanic workers in the private sector – two out of every three – do not have access to a pension or 401(k)-style plan, and more than half of Black workers do not have access. Although the numbers are lower for Asians (45 percent) and whites (42 percent), they are still substantial.

Other estimates of private sector coverage, also from this study by John Sabelhaus of the Brookings Institution, show big gaps between high- and low-paid workers and workers with and without college degrees, and at large and small employers.

Coverage also varies from state to state: In Pennsylvania, 41 percent lack access to a retirement plan, but in Florida, 59 percent do not have coverage.

Sabelhaus is certainly not the first to document disparities in retirement plan access for different demographic groups. But his methodology advanced the ball, resulting in more reliable estimates. By using three data sources, he could compensate for their shortcomings while taking advantage of the unique information in each one. He combined recent data from the U.S. Census Bureau, the IRS, and the Federal Reserve Board.

The AARP Public Policy Institute used to provide regular state-by-state breakdowns of plan coverage for various groups. But changes to the U.S. Census surveys that AARP was using rendered the figures unreliable. The institute said it will resume publishing the state coverage data using Sabelhaus’ methodology within the next couple months.

“Although it’s true that no single data set has everything policymakers should know about the current state of U.S. retirement workplace coverage,” Sabelhaus writes, the new estimates “provide a complete picture.”

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Dewey Mitchell

Thanks for sharing this. Retirement planning is vital because it might prevent you from running out of money in your golden years. Your strategy can help you figure out how much risk you should accept and how much money you can safely pull from your portfolio.


Just my 2 cents but I wonder whether the mentioned folks, regardless of race, are using IRA’s (either Regular or Roth). If they aren’t, the fact that they don’t have access to company plans becomes less relevant because they are not using the plans available to them anyway. Thanks for the data though. It is staggering that so few have access.

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