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  • Looking at the Whole Picture: Women of Color and Retirement

    By Beth Blair WISER’s National Academy of Social Insurance (NASI) Intern

    Retirement security, and particularly women’s retirement security, has been in the news a lot lately. Every day, my Google alert turns up a new article about older women’s poverty rates and lack of preparedness for retirement. It is true enough that women as a group are having a difficult time saving enough for retirement. However, women of color face additional challenges and are also much more likely to live in poverty in their elder years. This part of the story gets glossed over when we talk about women as a whole.

    Looking at the wealth of women, or their assets minus their debts, is helpful in understanding the barriers they face in saving for retirement; it shows how disparities across women’s lifespans affect their ability to save. A recent comprehensive report on the wealth of women of color was released by the Insight Center for Community Economic Development in 2010 (but keep in mind that because this data was collected prior to the recent recession, it is likely to overestimate women’s wealth). According to the report, single non-white women over 65 have a median wealth of $46,800, while single white women have a median wealth of $191,070. At earlier ages, many women of color have no wealth at all. For example, the median wealth of women of color in their working years, 36-49, is only $5. This number clearly illustrates the difficulty that women of color have in saving for retirement—when your debts exceed or nearly exceed your assets, how do you save for retirement?

    So why the wealth gap? There are many reasons, many of which stem from historic and current discrimination and barriers.  For example, A study by the National Community Reinvestment Coalition found that, in many areas, black loan-seekers are twice as or more likely to be given high cost mortgage loans, even when controlling for income. Because people of color were much more likely to be offered high cost mortgages, they fared worse than whites in the housing crisis. However, women of color are less likely to be homeowners than white women, and are therefore less likely to have wealth from home equity. They are also more likely to work in jobs that don’t offer pensions, such as in the service industry. When they do have pensions, they are not able to contribute as much due to lower earnings. Women of color are also more likely to have debt than white women, particularly credit card debt and student loans.

    The combination of gender and family structure also affects the wealth of women of color. Women of all races are likely to be the primary caregivers in their families, particularly when it comes to childcare responsibilities. This leads to less time spent in the workforce, reduced earnings, and reduced savings. Women of color are also less likely to be married, and are more likely to raise children by themselves, which decreases savings and overall earnings due to the financial burden of childrearing and time spent out of the workforce. It also affects Social Security benefits. While Social Security is the sole source of income for 25% of black women 65 and over, their benefits are likely to be lower than white women’s due to lower lifetime earnings.

    Women’s retirement security is an important issue that has been getting well-deserved media attention. But we need to look at the unique barriers that affect women of color, who are even more vulnerable to living in poverty in their elder years. Unless we do this, we are not looking at the retirement reality for all women.

    In the meantime, there are some options to bolster savings. The WISER website has many resources on budgeting and saving. In addition, you can look into opening an Individual Development Account (IDA). These savings accounts match your contributions, though they only allow withdrawals for specific purposes. Go to to see if there are any organizations in your area that offer them. You may also qualify for the Earned Income Tax Credit (EITC), a tax credit for low to moderate income workers. To find out if you qualify, check the IRS website at or call 1-800-829-1040.

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    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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