“What our research shows is that retirement assets are a much bigger piece of the wealth puzzle than most people realize,” Schuster said.
The report found that 61 percent of white households have some kind of retirement plan through their current employer, compared with 52 percent of black households and 34 percent of Hispanic households.
White and Asian workers in Massachusetts They have more 401(k) assets than their black and Hispanic peers, but the gap is smaller than the disparities for other racial groups. Investing in other assets, such as homeownership, could be an important lever for closing the racial wealth gap. And bring More families will become middle class.
Nationwide, retirement plan assets account for 41 percent of total personal wealth among black households headed by people ages 40 to 64, according to the report.
One key reason is that black workers are more likely than white and Hispanic workers to have public sector jobs that offer high-quality pensions.
These roles are also Although often associated with union work, such wealth accumulation Now the opportunities are fewer and fewer Since the 1980s, employers have been moving from defined benefit pension plans to defined contribution plans, where employees contribute and the employer supports them. These plans can be highly volatile depending on market conditions.
Workers without either option face increased uncertainty as they age.
“People who don’t have adequate retirement security are going to have to implement a patchwork of strategies to survive and get by,” Schuster says.
Many people will work longer before they are able to retire, and in some cases older people will be living with their adult children, which could have ripple effects for some families. The second generation ends up spending more money on caring for their families rather than building a safety net for retirement.
“If you don’t have a lot of disposable income outside of your monthly paycheck, the chances of you being able to open a separate individual IRA account are going to be pretty slim,” Schuster said.
recent years, Local efforts to create state-run retirement systems It offers everything Some workers have 401(k) plans but are not successful.
At the national level, Rep. Richard Neal Massachusetts is Automatic IRA Act of 2024 Create individual retirement accounts for gig workers and other independent contractors.
The bill would require organizations with 10 or more employees to automatically enroll their employees in a retirement plan if they don’t already offer one.
Schuster said the study was Small changes that could help improve retirement disparities, such as setting up payroll systems A system that automatically enrolls employees in a retirement plan rather than employees having to voluntarily join.
Default contributions can also be set so that workers over a certain age contribute more of their pay to the plan. According to reports.
This story was produced by the Globe. Money, power and inequality Our team covers the racial wealth gap in Greater Boston. Sign up for our newsletter here.
Esmy Jimenez can be reached at esmy.jimenez@globe.com. Follow Follow.
