Retirement plan
Retirement plan Photo courtesy of American Advisors Group

A new report by Boston Indicators has revealed a series of racial disparities in retirement plan coverage, assets and adequacy in the state of Massachusetts.

The main finding of the study, titled Inequality and Insecurity in Retirement, is that Massachusetts' Black and Latino residents have significantly less money saved for retirement than their white counterparts.

The data shows that between 2018 and 2022 the median value of White residents' 401(k) accounts was approximately $60,000, while Latino residents had a median of $30,000. Black residents had just $5,000 saved.

The report also highlighted that access to retirement savings accounts is not evenly distributed. Around 60% of White workers in Massachusetts have access to a retirement plan through their jobs, compared to 52% of Black workers and 44% of Latinos.

In an interview with GBH, Luc Schuster, executive director of Boston indicators, said these figures can be partly traced back to workers of color participating at lower rates in retirement programs:

"Those workers [are] needing that stream of income in the near term more than their white counterparts, because they have less other sources of wealth or financial support to make ends meet. So, I mean, just if you think about it for yourself, if you were living paycheck to paycheck, it's just going to be much harder to dedicate 5-10% of your income in a given month to that longer term savings."

Education and income also play significant roles in access to retirement savings. The study revealed that only 44% of individuals with high school diplomas in the state have access to employer-based retirement plans, compared to 70% of those with college degrees. Access is similarly skewed by income, with 81% of workers earning over $78,000 a year having access to retirement plans, compared to just 40% of those earning between $18,000 and $31,000 annually.

Schuster highlighted the importance of recent efforts to reduce the racial wealth gap in Massachusetts, which include boosting homeownership among families of color and supporting entrepreneurship. He stressed that retirement savings and assets are also crucial components of wealth-building and should be part of the broader conversation on economic equity.

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