The pandemic has hit minorities in a hard way and has hit low-income Black workers much worse than the average worker, according to a new AARP study.
According to the study, 30% of Black workers say that their overall financial condition is worse than before the pandemic. Among Black workers with incomes of $40,000 or less, 36% said their financial condition was worse, primarily because of job losses, furloughs and reduced hours.
“What we see in this survey, as well as what we know about financial well-being, is that jobs, wages and employee benefits are key components to feeling financially secure,” Gary Koenig, AARP senior vice president of financial security, says in the survey. “This was true pre-pandemic, was highlighted during the pandemic, and will continue to be the case moving forward.”
The survey also notes that Black workers expressed lower satisfaction with their overall financial situation, compared to white and Hispanic workers. Just half (51%) of Black workers are at least somewhat satisfied with their current financial situation, compared to 66% of white workers and 57% of Hispanic workers.
Debt payments and everyday expenses are top barriers to saving for the future, the survey shows, with lack of money (54%), debt (40%), and the cost of healthcare (14%) being the top barriers that Black workers face to saving more for retirement.
In addition, fewer than half (46%) of Black workers say they are very likely to achieve financial security and avoid being a burden in retirement. The survey finds that those who are 50-plus are the most pessimistic, with just 38% thinking that they will have a financially secure retirement, and 44% confident that they won’t be a burden on others.
Nearly three in ten (28%) Black workers prematurely dipped into retirement savings or stopped contributing altogether since the COVID-19 pandemic began, jeopardizing their retirement security, according to the survey.
“What we saw is that debt remains a barrier to saving for retirement, and there is a wide gap between what people say they want their financial futures to look like and their expectations of achieving it,” Koenig says. “A good job with steady employment is priority number one, but having a manageable amount of debt and savings for an emergency are keys to financial security today and in the long run.”
And also in terms of retirement security, the survey finds that fewer than half of Black workers have savings vehicles such as savings accounts and employer-provided retirement accounts, which represents another barrier to building savings: Just 39% of Black workers have a savings account, compared to 60% of white workers. In addition, only 68% of Black workers have a checking account, compared to 88% of white workers.
However, Black workers express widespread optimism about their financial situation a year from now, the survey notes. Most Black workers ages 25-49 and those with incomes of $75K+ are especially optimistic. For example, 79% of those with incomes of $75K+ expect their financial situation to be better at this time next year, compared to just 72% of those with incomes under $40K and 73% of those with incomes of $40-$74K.
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