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Are You Saving for Retirement? Racial/Ethnic Differentials in Contributory Retirement Savings Plans

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  • Christopher R Tamborini
  • Changhwan Kim
  • Deborah Carr

Abstract

Objectives: How individuals and families accumulate retirement resources during working years is a key aspect of aging with implications for later life. This study examines how much, and by what mechanisms, savings in retirement plans vary by race/ethnicity.Method: Using representative survey data and linked W-2 tax records, we estimate the probability of participation in employer-sponsored defined contribution (DC) retirement plans with probit regression, and contribution levels with ordinary least squares (OLS) models. We use Heckman models to adjust for potential sample selection.Results: Black and Hispanic workers have lower participation and contributions in employer-sponsored DC retirement plans than do white workers, while Asian Americans have higher levels. The bulk of racial/ethnic differences is attributed to socioeconomic position, especially education and labor market circumstances like earnings. Differentials are also associated with family circumstances, namely for black workers. After accounting for education, labor market, and family covariates, social-psychological factors appear to explain only small portions of differences, especially for black and Hispanic.Discussion: This study clarifies how racial/ethnic disparities in socioeconomic circumstances generate advantages and disadvantages in retirement wealth accumulation. Lower DC retirement plan participation and contributions among minorities in work life represent an underappreciated earlier-life channel through which racial inequalities in income and wealth in later life are generated.

Suggested Citation

  • Christopher R Tamborini & Changhwan Kim & Deborah Carr, 2020. "Are You Saving for Retirement? Racial/Ethnic Differentials in Contributory Retirement Savings Plans," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 75(4), pages 837-848.
    • Handle: RePEc:oup:geronb:v:75:y:2020:i:4:p:837-848.
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    File URL: http://hdl.handle.net/10.1093/geronb/gbz131
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    Citations

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    Cited by:

    1. Vieira, Kelmara Mendes & Rosenblum, Tamara Otilia Amaral & Matheis, Taiane Keila, 2022. "And tomorrow, how will it be? Developing a Financial Preparation for Retirement Scale (FPRS)," Journal of Behavioral and Experimental Finance, Elsevier, vol. 35(C).
    2. Christos I. Giannikos & Efstathia D. Korkou, 2023. "Gender and Risk-Taking in the Building of U.S. Retirement Wealth," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 51(4), pages 259-274, December.
    3. Samuel Cole & Zachary Cowell & John M. Nunley & R. Alan Seals Jr, 2022. "The Distribution of Occupational Tasks in the United States: Implications for a Diverse and Aging Population," Papers 2205.00497, arXiv.org.

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