Nearly half of Americans nearing retirement age (65 years old) have less than $25,000 put away, according to the Employee Benefit Research Institute’s annual survey.
One in four doesn’t even have $1,000 saved.
More than two-thirds of Latino workers do not own assets in a retirement account, according to the National Institute on Retirement Security. About 62 percent of Black households don’t, either.
In comparison, just 37 percent of white households said they don’t have any assets saved in retirement accounts.
The Urban Institute estimates the average white family has $157,800 in retirement savings. Hispanic families have $28,500, and Black families have $25,000 put away.
“The American dream remains out of reach for many African-American and Hispanic families,” Signe-Mary McKernan, an economist at the Urban Institute, told PBS.
Black and Hispanic workers tend to earn less over their lifetime, which means they have less to save than white workers. But McKernan said the financial savings system is also stacked against them. Tax deductions for mortgages and other investments, for example, do not offer many incentives to lower-income workers.
“The federal government spends billions of dollars to support long term asset building,” McKernan said. “But because they go through the tax code, they primarily benefit higher-income families.”
According to a recent USA Today report, an array of health and financial problems converge on African-Americans as they age, posing a potentially devastating impact on them.
Blacks are more likely than whites to suffer medical conditions that lead to more severe health problems and higher health care and insurance costs as they grow older, the report noted. Their health problems are exacerbated by financial troubles that include lower savings, homeownership rates and Social Security income than whites.
“It’s a huge issue,” Maya Rockeymoore Cummings, chair of the Maryland Democratic Party and CEO of Global Policy Solutions, a D.C.-based social change strategy firm, told USA Today. “Over our working life, we experience pay disparities, have little wealth in our families and often support others.
“By the time we reach an age when chronic diseases catch up with us, we are … dropping out of the workforce and relying on disability or taking early Social Security retirement,” she said.
In its recent magazine, AARP provided a “Countdown to Retirement,” a 10-year timeline filled with expert advice including what would benefit individuals who are 10 years, five years, one year or three months away from retirement.
AARP experts said it’s important to take a quick test. Assuming retirement is 10 years away, they said individuals would want to have about seven times their current salary in savings, a figure that’s based on research from Fidelity.
That would put a person on the road to having about 10 times their final salary saved by retirement and maintaining their present standard of living.
Among the ways experts said will help in retirement is to save more money by splitting direct deposits across accounts. Have your payroll department put part of each check into an online savings account, where “it’s out of sight and out of mind,” AARP experts said.
The direct deposit users who split their deposits save up to $90 more per month than those who use another method.
Also, be sure and pay down mortgages, put new retirement savings to work and prepare a “Plan B.”
About half of workers cruise to a planned, voluntary retirement; the rest exit prematurely, according to various statistics.
“With 10 years to go, there is still enough runway to make a mark,” said career and retirement expert Nancy Collamer.
For those five years away from retirement, AARP offers a 15-second retirement readiness quiz that includes questions about whether individuals have unopened credit card bills and whether your retirement financial plan is simply to get by on Social Security.
Experts at AARP encourages all to “attack” debt and do home improvement on the cheap. The organization also provide tips on “how not to get fired.”
For those one year away from retirement, AARP experts encourage a “test drive” of your budget, consolidate accounts and a visit to the dentist.
Those three months away, should check in with human resources, check in with Social Security, and price out aging in place.
“The retirement crisis in the United States today is very real,” Angela Antonelli, executive director of Georgetown University’s Center for Retirement Initiatives, told PBS. “The reality is as we look at what people have put away for retirement today they haven’t put a lot away for those who are age 65.”