This Pension Research Council volume provides a range of perspectives on the causes and consequences of retirement wealth inequality, along with suggested opportunities to close the gaps.
Many older Americans today are poorly prepared to finance their retirement years, and such under-preparedness is especially acute for members of disadvantaged racial and ethnic minority groups. Black and Hispanic families, for example, have only a quarter of the amount of net private wealth (assets minus liabilities) compared to White families. Moreover, racial wealth gaps have not diminished much in the past four decades, in part because Whites tend to save more in and withdraw less from employer-sponsored retirement plans than do their Black and Hispanic counterparts.
The studies herein provide a range of perspectives on the causes and consequences of retirement wealth inequality, along with suggested opportunities to close the gaps. The contributors explore new datasets, analyze historical trends in income and wealth disparities, and evaluate alternative wealth and inequality measures. They also evaluate the roles of differential access to financial, housing, and human capital, and the role of the social security program. While the latter is a great equalizer, narrowing racial gaps considerably, the program faces insolvency and, without reform, it will be unable to pay full scheduled benefits within a decade.
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1: Olivia S. Mitchell and Nikolai Roussanov: Diversity, Inclusion, and
Inequality in Retirement Wellbeing: An Overview
I. Retirement Wealth Inequality
2: Gustavo Suarez, Jeffrey Thompson, and Alice Henriques Volz: Retirement
Assets and the Wealth Gaps for Black and Hispanic Households
3: Karen Dynan and Douglas Elmendorf: Changes in Racial Gaps in Retirement
Security over Time
4: Edward N. Wolff: Understanding Trends in Hispanic and African American
Retirement Preparedness in the US
5: Jean-Pierre Aubry, Alicia H. Munnell, and Gal Wettstein: Wills, Wealth,
and Race
I. The Roles of Housing, Expectations, and Social Security
6: Larry Santucci: The Racial Wealth Gap and the Legacy of Racially
Restrictive Housing Covenants
7: Abigail Hurwitz, Olivia S. Mitchell, and Orly Sade: Racial and Ethnic
Differences in Longevity Perceptions and Implications for Financial
Decision-Making
8: Sylvain Catherine and Natasha Sarin: Social Security and the Racial Wealth
Gap
II. Differential Access to Financial and Human Capital Markets
9: Vicki L. Bogan: Financial Inclusion and Retirement Preparedness in the
United States
10: Amir Kermani and Francis Wong: How Racial Differences in Housing Returns
Shape Retirement Security
11: Mingli Zhong and Jennifer Andre: Racial Differences in Debt Delinquencies
and Implications for Retirement Preparedness
12: Annamaria Lusardi, Olivia S. Mitchell, Alessia Sconti, and Andrea Sticha:
Understanding Financial Vulnerability among Asians, Blacks, and Hispanics in
the United States
III. Narrowing the Gaps
13: Carl Davis and Brakeyshia Samms: Tax Policy to Reduce Racial Retirement
Wealth Inequality
14: John J. Kalamarides: Improving the Financial Security of Workers of Color
through Employee Financial Wellness Programs
15: David C. John, J. Mark Iwry, and William G. Gale: Enhancing Retirement
Wealth and Reducing Retiree Inequality: Emergency Savings 460 Accounts and
Other Policy Options
16: Naomi Zewde: Would Baby Bonds Reduce Racial Retirement Wealth Inequality?
Olivia S. Mitchell is the International Foundation of Employee Benefit Plans Professor, Executive Director of the Pension Research Council, and Director of the Boettner Center on Pensions and Retirement Research, all at the Wharton School of the University of Pennsylvania. Concurrently she is a Research Associate at the NBER and Independent Director of the Allspring Mutual Fund Boards. She is also a Distinguished Fellow of the American Economic Association. Her research focuses on pensions, risk management, financial literacy, household finance, and public finance.
Nikolai Roussanov is Moise Y. Safra Professor and Professor of Finance at the Wharton School, University of Pennsylvania, and Research Associate at the National Bureau of Economic Research. His research explores asset pricing, macroeconomics, currency and commodity markets, entrepreneurship, and individual financial behaviour. At Wharton he has taught courses on Behavioural Finance, Fixed Income Securities, and Consumer Financial Decision Making to undergraduate and MBA students, as well as Empirical Methods in Finance aimed at students in the doctoral program.
