Black and Hispanic Americans Face Extra Retirement Planning Challenges – ThinkAdvisor

What You Need to Know

  • Black and Hispanic Americans across income groups were more likely to have lost a job or taken a pay cut due to the pandemic.
  • They are also more likely than white Americans to prioritize paying for a child’s education over saving for retirement.
  • Black and Hispanic Americans are more likely than whites to look for a financial advisor with whom they have something in common.

In preparing for retirement, Black and Hispanic Americans face more challenges that white Americans, including having taken a bigger economic hit from the pandemic, according to a new report from the Employee Benefit Research Institute and Greenwald Research. 

The two groups disproportionately report lower financial resources, and how they feel about retirement and financial security is clearly influenced by having lower income, the report said.

The report is based on an online survey conducted January among 3,017 Americans 25 and older, equally divided between workers and retirees. This year’s survey also included an oversample of 741 Americans who identified themselves as non-Hispanic Black and 731 who identified as Hispanic to allow for a closer analysis of the challenges that they face in saving and preparing for retirement.

Researchers identified three income groups: lower, earning $35,000 or less annually; middle, $35,000 to $74,999; and upper, $75,000 or more.

The study’s examination of key demographic differences included that Black and Hispanic Americans are likelier to have lower incomes and assets, which historically correlate with retirement confidence.

In fact, the report said, confidence in having enough money to live comfortably in retirement increased with income, and the percentage of Americans being very or somewhat confident was not significantly different by race or ethnicity when controlling for income. 

For example, for those with annual household incomes of $75,000 or more, 86% of white, 84% of Black and 85% of Hispanic Americans reported that they were confident about their retirement prospects. 

By comparison, in the lower income group, those with less than $35,000 of annual income, 48% of white, 50% of Black and 46% of Hispanic Americans were very or somewhat confident.

Debt and Pandemic Effects

Black and Hispanic respondents were likelier than their white counterparts to consider debt to be a problem for their household, regardless of income. 

In the upper income group, 62% of Black Americans and 58% of Hispanic Americans said debt was a problem, compared with 37% of white Americans. As a result, both workers and retirees in those two groups were more likely to say debt was affecting their ability to save for retirement, live comfortably in retirement and save for emergencies across each income group.

Three in 10 Americans, regardless of income, reported that their households had experienced a negative income or job change since Feb. 1, 2020. 

Black Americans with lower and middle incomes and Hispanic Americans in all three income groups had higher likelihoods of experiencing a negative income or job change than did white Americans, with about 40% of Hispanic Americans in the lower and upper income groups having a negative change since Feb. 1, 2020.