21st Century “Retirement 101”

by Wilhelmina A. Leigh, Ph.D.

It’s not your parents’ retirement—especially if your parents retired with a pension and a gold watch after 25 years on the job.  For today’s working adults, it’s more likely to be a retirement based on the safety-net-level of benefits from Social Security, supplemented with personal savings and investment.  The catch is, however, that too many African Americans are saving too little to be comfortable during their retirement years under this model.

Average monthly Social Security retirement benefits for African-American males ($1,120) and African-American females ($960.50) provide an annual income only modestly above the federal poverty threshold for persons 65 years and older ($10,458). The additional fact that 70 percent of African Americans have saved less than $25,000 for retirement suggests there will be little “gold” in our golden years.

Personal savings and investment can take place both via employer retirement plans and independent of employment.  Saving through employer pensions and retirement plans does not look especially promising for African-American workers, however, due to their chronic unemployment and underemployment and to the shrinking availability of employer retirement plans in general.  Only 59 percent of all workers and 56 percent of black workers ages 25-59 were offered employer retirement plans or pensions in 2009, with half or less (50 percent of all workers and 45 percent of black workers) who received offers actually enrolling in the available plans.

Thus, for many, saving and investing for retirement independent of employment (for example, in Individual Retirement Accounts, or IRAs) becomes the major source of funds to supplement Social Security retirement benefits.  A key issue for African Americans, though, is having disposable income to save.  A 2009 Joint Center poll found that 53 percent of African Americans at all income levels—and 65 percent with income of $35,000 or less— “wanted to save but did not have enough money to.”

Raising our current retirement income status from only 30 percent who have saved $25,000 or more for retirement should become a priority for African Americans.  Otherwise, our definition of retirement may become confined to working (either full-time or part-time) until the day we die, or eking out an existence on Social Security benefits alone.


Wilhelmina A. Leigh is Senior Research Associate of the Economic Security Initiative of the Civic Engagement and Governance Institute at the Joint Center for Political and Economic Studies. More information on Dr. Leigh and her work can be found at the Joint Center website.

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