STATEMENT: African-American and Latino Seniors Are Financially Vulnerable in Retirement and Unable to Weather Current Financial Downturn, Report Finds
Over nine out of 10 senior households of color do not have sufficient economic security to sustain themselves through their projected lives.
New York — New research shows that 9 out of 10 senior households of color do not have the economic security needed to sustain themselves through their lives, leaving them in a precarious situation when it comes to surviving current economic conditions. These are the findings of a report released today by The Institute on Assets and Social Policy (IASP) at Brandeis University and Demos.
The report, called Severe Financial Insecurity among African American and Latino Seniors, found that 9 out of 10 African-American and Latino seniors are at risk in when it comes to their assets, budgets, healthcare expenses, housing expenses and home equity.
Using the Senior Financial Stability Index, a measurement developed by IASP and Demos, the report found that 76 percent of African American and 85 percent of Latino seniors do not have enough financial resources — including pensions, Social Security, or other income — to cover their expenses through retirement.
Specific findings from the report include:
- Forty-four percent of African-American and 37 percent of Latino seniors either rent or have no home equity, meaning they face unpredictable housing costs and cannot draw on their home as an asset in times of need.
- Three out of five senior households of color use more than 30 percent of their income to pay housing costs, matching the Department of Housing and Urban Development's definition for unaffordable housing.
- More than a third of African-American and Latino seniors pay out-of-pocket health expenses that eat up 15 percent or more of their income.
- Thirty-nine percent of African-American and 57 percent of Latino seniors have no money left over or are actually in debt after meeting their essential expenses, leaving them no cushion.
These data show that millions of African American and Latino seniors are living on the edge of financial collapse, unable to rely on assets, income, or other pillars of financial stability. Recent losses in assets and housing values have only served to increase their vulnerability.
"Unless policies are developed to reverse these trends, the current economic crisis will compound economic vulnerabilities and have a long-lasting negative impact," said Tatjana Meschede, Director of Research at IASP and lead author of the report.
The report shows the need for increased urgency in stabilizing and enhancing retirement resources. "Future retirees will be worse off unless we attend to policies that grow their resources for the future, and combat the rising costs of essential expenses for seniors," said Jennifer Wheary, report co-author and a Senior Fellow at Demos.
Demos is currently working to raise awareness of the limitations of our nation's approach to pensions, which increasingly shifts responsibility from employers to individuals. Given the increased reliance on 401(k)s and other individual savings vehicles for retirement in an era of stagnant and declining wages, Demos also seeks to strengthen the nation's Social Security system.
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