Minorities and Retirement Security (MRS)

1. Minorities and Retirement Security (MRS) Dr. Hervani (PI) SaeidDelnavaz (RA) First Seminar March 7, 2014 Chicago State University

2. ResearchPurpose • To Address the financial literacy and retirement planning needs within minority and low-income communities.

3. In the First Month (02/01/2014-03/02/2014) I Worked on The Following Articles: • 1) Household Saving Behavior: The Role of Financial Literacy, Information, and Financial Education Programs by AnnamariaLusardi, February 2008 • 2) Financial Literacy and Planning: Implications for retirement wellbeing by AnnamariaLusardi and Olivia S. Mitchell, October 2006 • 3) Better Financial Decision Making among  Low-Income and Minority Groups by Peter Tufano, Timothy Flacke and Nocholas W. Maynard, October 2010 • 4) For many minorities, saving isn't so easy by Sandra Block and Laura Petrecca, 2007 • 5) The Impact of Pay Inequality, Occupational Segregation, and Lifetime Work Experience on the Retirement Income of Women and Minorities by Olivia S. Mitchell,Phillip B. Levine, John W. Phillips, 1999 • 6) Retirement Security for women by E. Papke, Lina Walker, and Michael Dworsky, 2008

4. 7) Minority Workers Remain Confident about Retirement, Despite Lagging preparation and False Expectation by Ruth Helman, Mathew Greenwald, 2007 • 8) Race and Retirement Insecurity in the United States by NariRhee, 2013 • 9) Racial and Ethnic differences in the retirement prospects of divorced women in the baby boom and Generation X cohorts by Barbara A. Butrica and Karen E. Smith, 2012 • 10) Income, Poverty` and Financial Fragility of Elderly Latinos by Sung-Chang Chun, Wei Sun, HyunjinDeborahKwak, 2013 • 11) Improving Retirement Security for Latinos by Leticia Miranda, 2010 • 12) Moving Women out of Poverty by Canadian Women's Foundation • 13) Black and Latino Retirement (IN)Security by NariRhee, 2012 • 14) The Crisis of Economic Insecurity for African-American and Latino Seniors by TatjanaMeschede, Laura Sullivan, Thomas Shapiro, 2011

5. 15) The Elusive American Dream:LowerWages, High Unemployment and an Uncertain Retirement for Latinos, 2013 • 16) Minority Women and Retirement Income by Cindy Hounsell, 2008 • 17) People of Color and the Challenge of Retirement Security by Robert B. Hudson, 2002

6. Article #1: The Impact of Pay Inequality, Occupational Segregation, and Lifetime Work Experience on the Retirement Income of Women and MinoritiesOlivia S. Mitchell,Phillip B. Levine, John W. Phillips, 1999 • Problem Statement: Women and minorities are especially vulnerable in retirement: both groups face a disproportionately high risk of poverty in their old age. Lower earnings and fewer years in the work force translate into less retirement income because pensions and Social Security typically reward those with higher pay and more years of paid work. MRS: Article #1

7. Purpose This report reviews and synthesizes existing research in the area of pay inequality— differences in earnings between working men and women and between minority and white workers. It then uses the Health and Retirement Study (HRS) to evaluate the relative importance of personal characteristics and labor market experiences in determining the retirement income prospects of older women and minorities. The report examines the anticipated wealth available, by sex and minority status, from three sources: Social Security, employer-provided pensions, and other financial assets, including housing. MRS: Article #1 MRS: Article #1

8. Methodology The first section of the study reviews the labor economics literature on pay inequality. It examines the `between men and women, including the effects of occupational segregation, lifetime labor market attachment, education, and experience. The second section of the study estimates anticipated retirement income using the first (1992) wave of the HRS, a nationally representative sample of U.S. The analysis that follows first describes HRS respondents’ wealth levels along with the anticipated annual income flows they represent. Next, we estimate multivariate models of annual retirement income for men and women. These regression models are estimated separately by sex and marital status so that results can be compared across groups. Having in hand estimates of the effects of each factor on projected retirement income, we next evaluate how much of anticipated retirement income differences by sex could be attributed to differences in the workers’ characteristics: MRS: Article #1

9. Where RY represents a particular measure of economic well-being; b represents the vector of regression coefficients estimated using the multivariate model described above; the X values represent a vector of mean characteristics, f and m represent women and men, and k indexes characteristics. The first expression on the right hand side of this equation is said to represent the "explained" part of the differential in retirement income because it is attributed to the different characteristics of men and women. The second expression is said to represent the "unexplained" part of the differential because it would result in differences in income even if men and women had the same characteristics. MRS: Article #1

10. Conclusions • The continuing problem of poverty among older women and minorities prompts analysts and policymakers to ask why these groups have a high likelihood of being poor in old age. Our specific focus has been to explore the role of differences in earnings patterns, years of labor market experience, and occupation as influenced by the concentration of women in these jobs. In addition, we controlled for differences in raceand a series of other socioeconomic factors. MRS: Article #1

11. Article #2: Income, Poverty and Financial Fragility of Elderly Latinos by Sung-Chang Chun, Wei Sun, HyunjinDeborahKwak Problem Statements • Census 2000 shows that Latinos have a lower median age than White and Black groups. Median age for Latino is 26 compared to 29 for Black, and 39 for White. Nonetheless, the elderly population of Latinos has increased rapidly during the past decade. • Considering such a population increase, we will examine how much the economic status of the Latino elderly has improved over the last decade. Moreover, we will test whether or not the financial future of the Latino elderly is less secure than the prospects for the White and Black elderly. MRS: Article #2

12. Purpose • 1. Income and Poverty of Elderly Latinos:The poverty rate for the Latino elderly has increased by 1 percent from 20 percent in 2000 to 21 percent in 2003. • 2. Five Major Sources of Income: • 1) Social Security Income: compared to their Black and White counterparts, the Latino elderly are more likely to receive smaller amounts of Social Security benefits due to their lower paying jobs. • 2) Pension Income: elderly Latinos received only 2% of their income from pensions, compared to 15% for Whites and 14% for Blacks • 3) Income from Assets: The data shows that the Latino elderly received $1,438 from assets on average, lower than the $3,046 for Whites but higher than the $949 for Blacks • 4) Earnings: 14 percent of the Latino population age 65 and over are in the civilian labor force, compared to 14 percent of the White elderly and 13 percent of the Black elderly. • 5) Income from Public Assistance:8 percent of the total income for the elderly Latino population is from public assistance, compared to 1 percent for Whites and 4 percent for Blacks

13. Methodology • The main data was drawn from the 1990 , 2000 , and 2003 American Community Survey (ACS). They also used March 2005 Current Population Survey (CPS).

14. Conclusion • In general, the Latino elderly population is faring worse than Whites and is similar to the Black elderly in terms of retirement income security since they receive fewer amounts of Social Security benefits and pensions and are less likely to be covered by employer-sponsored pension plans and private health insurance.

15. Article #3: Race and Retirement Insecurity in the United States By NariRhee, December 2013 Problem statement: In July 2013, the National Institute on Retirement Security (NIRS) released “The Retirement Savings Crisis: Is It Worse Than We Think?”The study found that private sector retirement access is near its lowest point since 1979, with only 52 percent of employees in jobs that offer retirement benefits.

16. Purpose • 1) They examine racial disparities in retirement readiness among workers and households age 25-64 • 2) This paper analyzes workplace retirement coverage, retirement account ownership, and retirement account balances among whites, people of color, and Blacks, Latinos, and Asians

17. Methodology • Findings are based on an analysis of data from the U.S. Bureau of Labor Statistics: 1) Current Population Survey Annual Social and Economic Supplement 2) The U.S. Federal Reserve’s 2010 Survey of Consumer Finances(SCF)

18. Conclusion • 1) Workers of color, in particular Latinos, are significantly less likely than white workers to be covered by an employer-sponsored retirement .

19. 2) Households of color are far less likely to have dedicated retirement savings than white households of the same age.

20. 3) Households of color have substantially lower retirement savings than white households. This graph indicates the share of working-age households with retirement account balance less than $10,000, by race, 2010