The shift from traditional defined-benefit pensions to 401(k) plans over the past two decades has left the vast majority of Americans unprepared for retirement. Minority workers have been disproportionately affected. In 1990, black workers were almost as likely as white workers to have pensions, as shown in the figure below. Over the next two decades, blacks started falling behind whites. By 2010, only 43 percent of black workers age 26-61 were participating in an employer-based retirement plan, compared to 50 percent of white workers the same age. Hispanics, meanwhile, who already lagged behind both groups, fell even farther behind.
Share of workers age 26–61 participating in an employer-based retirement plan, by race/ethnicity, 1989–2010
| Year | White, non-Hispanic | Black | Hispanic |
|---|---|---|---|
| 1989 | 48% | 47% | 32% |
| 1990 | 49% | 49% | 33% |
| 1991 | 49% | 48% | 33% |
| 1992 | 50% | 48% | 33% |
| 1993 | 50% | 46% | 32% |
| 1994 | 50% | 43% | 32% |
| 1995 | 51% | 49% | 32% |
| 1996 | 52% | 49% | 31% |
| 1997 | 52% | 48% | 35% |
| 1998 | 53% | 48% | 32% |
| 1999 | 55% | 49% | 36% |
| 2000 | 56% | 50% | 36% |
| 2001 | 56% | 48% | 35% |
| 2002 | 55% | 48% | 33% |
| 2003 | 53% | 46% | 30% |
| 2004 | 53% | 48% | 31% |
| 2005 | 53% | 47% | 30% |
| 2006 | 52% | 45% | 29% |
| 2007 | 50% | 43% | 28% |
| 2008 | 53% | 45% | 29% |
| 2009 | 51% | 43% | 29% |
| 2010 | 50% | 43% | 27% |
Note: In this figure, “black” and “Hispanic” are not mutually exclusive categories, so a black person of Hispanic origin will be included in both categories.
Source: Authors' analysis of Current Population Survey data from the Integrated Public Use Microdata Series (King et al. 2010)
The most likely cause is the shift from traditional defined-benefit pensions to 401(k) plans. While most 401(k) participants are required to contribute to these plans in order to participate, workers are automatically enrolled in defined-benefit pensions and, in the private sector, are not required to contribute to these plans. Thus, blacks and other groups with less discretionary income are less likely to participate in 401(k) plans. In addition, lower-income workers are less likely to work for employers who provide benefits (including matching 401(k) contributions) and receive less of a tax break for participating in these plans. To learn more about disparities in retirement preparedness and outcomes, see the full report Retirement Disparities Chartbook: How the 401(k) Revolution Created A Few Big Winners and Many Losers.
