Tamborini CR, Kim C. Are You Saving for Retirement? Racial/Ethnic Differentials in Contributory
Retirement Savings Plans.
J Gerontol B Psychol Sci Soc Sci 2020;
75:837-848. [PMID:
31628753 DOI:
10.1093/geronb/gbz131]
[Citation(s) in RCA: 4] [Impact Index Per Article: 1.0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 04/04/2019] [Indexed: 01/12/2023] Open
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.
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