The future retirement for middle-class Americans, particularly Black and Hispanic citizens, may be economically challenging due to factors such as wealth disparity, savings depletion, and decreasing property ownership.
Evidence shows an escalating rate of wealth inequity, meaning that many individuals and families lack the necessary financial capacity to create substantial retirement savings. This, along with a concerning trend of savings depletion, suggests many Americans may not have enough funds to sustain them during their retirement years.
A decline in property ownership rates among Black and Hispanic Americans adds to these financial concerns. Property ownership is a significant form of economic stability and a source of fixed income during retirement.
A study by the National Opinion Research Center (NORC) at the University of Chicago predicts financial difficulty for the “forgotten middle” – older, middle-class adults aged 75 or older not on Medicaid. According to the research, a significant proportion of this group may have to spend down their assets to qualify for Medicaid or risk becoming “financially invisible”.
These findings party explain why it’s more important than ever to advocate for financial literacy, affordable housing initiatives, and income equality. Early interventions and the development of support schemes could help alleviate these forecasted issues. As the demographic changes, with Black and Hispanic percentages growing from 12% to about 25% by 2035, the need for innovative solutions and policy changes becomes even more urgent.
Data reveals an overrepresentation of Black and Hispanic adults in the lowest financial tier. By 2035, these groups are predicted to make up 12% and 18% of the poorest quartile, respectively. On the contrary, white Americans are expected to comprise 82% of the highest income group.
Furthermore, Black and Hispanic adults of middle income have been found to have fewer liquid assets such as stocks or retirement savings compared to their white counterparts. Such discrepancy points out a significant gap in wealth accumulation between different racial and ethnic groups.
Sara Rayel, Senior Director of healthcare strategy at NORC, has highlighted potential drops in property ownership rates. Particularly troubling is the decrease among older Black individuals. Rayel points out that property ownership significantly contributes to the security and stability of the older population.
These findings are supported by University of Southern California and Columbia University research, which shows a 31% drop in homeownership rates among low-income Americans and significant decreases in health insurance coverage rates. The rising cost of living and stagnant wages have exacerbated the situation.
The 2022 Federal Reserve Survey of Consumer Finances underlines this worrying situation, illustrating that many pre-retirement Americans have minimal retirement savings. These significant disparities are a national concern, underscoring the need for a more comprehensive approach to financial security and wealth equality.
