2019 RDRC Meeting: Measuring Racial/Ethnic Retirement Wealth Inequality

Published: 2019


As the U.S. population becomes more diverse, it will be increasingly important for policymakers addressing Social Security’s solvency to understand various racial and ethnic groups’ reliance on the program. To date, studies on retirement wealth have tended not to focus on race and ethnicity, have largely ignored the role of Social Security, or have excluded the most recent cohort approaching retirement, the Late Boomers. This project uses data from the Health and Retirement Study (HRS) to document the retirement resources of white, black, and Hispanic households at various points in the wealth distribution for five HRS cohorts of 51-56 year olds between 1992 and 2016. The findings suggest that, in 2016, the typical black household had 46% of the retirement wealth of the typical white household, while the typical Hispanic household had 49%. Although this inequality was fairly constant over the cohorts considered, a decline in white households’ retirement wealth between 2010 and 2016 narrowed the racial and ethnic gaps in retirement wealth slightly. This inequality would be much higher but for the presence of Social Security; black households had just 14% of the non-Social Security retirement wealth when compared to white households, and Hispanic households just 20%. Across the board benefit cuts, such as increases in the Full Retirement Age, will have an outsize impact on black and Hispanic households’ retirement wealth. As policymakers consider changes to the Social Security program to shore up its finances, considering ways to mitigate any impact on these groups may be important.

Key Findings