Who is at Risk?
While a majority of Americans today face increasing vulnerabilities in achieving a secure retirement, some groups are particularly at risk. These groups include women, Hispanic Americans, small business owners and those who work in the agricultural sector. In general, these groups lack access to traditional employer-sponsored retirement plans. They may also be affected by unique factors that limit their opportunities to build up and manage their retirement assets, including income disparities, unpredictable income based on commodity prices, limited access to traditional savings vehicles and, for women, longer life expectancy and a frequent loss of spousal benefits when one spouse dies.
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Women
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Farmers
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Hispanic- Americans
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Small Business Owners
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| The risk of suffering a significant decline in standard of living during retirement is especially acute for women… | Farmers would benefit significantly from increased access to retirement vehicles that pay a steady stream of income for life… | Hispanic-American workers face a greater risk to their retirement security than workers overall… | For the vast majority of working men and women the main sources of guaranteed income are increasingly weak… |
Women
On average, women have fewer full-time working years than men and have median earnings that are about $10,000 less than those of working men. Women typically live longer than men and are likely to spend some of their retirement years alone due to widowhood or divorce. These disparities lead to lower savings and retirement income and smaller payouts from Social Security, ultimately resulting in a greater risk of poverty in retirement.i
- A single female, earning $50,000 a year and not covered by a defined benefit plan, has an 82 percent chance of outliving her financial assets in retirement.ii
- A single female, earning $50,000 a year covered by a defined benefit plan, has a 35 percent chance of outliving her resources in retirement.iii
Rural and Farming Communities
America’s rural and farming communities are influenced by factors that make obtaining a secure retirement uniquely difficult. Farmers are less likely to be covered by traditional pensions, forcing them to rely on Social Security at a much greater rate than those in other sectors at a time when Social Security on average only covers two-thirds of retirement needs.vIn addition, there is extreme variability in farm income due to largely uncontrollable fluctuations in commodity prices, weather, and macroeconomic policies making it more difficult for farmers to adequately plan and save for retirement.
Hispanic Americans
While Hispanics work in all sectors of the economy, they are more heavily concentrated in jobs that lack traditional retirement options and typically earn a lower income, affecting their ability to save for retirement. Recent trends indicate that Hispanics have actually become less prepared for retirement over the past few years.
- The mean annual income for non-Hispanic white retirees is $24,351, compared to $16,947 for Hispanics.
- Only 25.6 percent of Hispanics are covered by pensions plans, compared to 42.5 percent of whites and 40 percent of African-Americans.iv
Small Business Owners
Small business owners face unique challenges that put them at risk of falling short in retirement. Aside from reinvesting much of their income into their businesses, many self-employed individuals and their employees have no access to traditional defined benefit (pensions) or defined contribution plans (such as a 401K). The cost of contributing to and administering traditional plans can be a challenge for owners that recommit most of their income to their businesses growth. For many entrepreneurs, the sale of their business is expected to finance their retirement.
- Only 30 percent of agricultural workers in the United States work for an employer that sponsors some form of a retirement plan. Overall, less than a quarter of all farm workers participate in a retirement plan.vi
i “The Female Factor: Why Women Are at Greater Financial Risk in Retirement and How Annuities Can Help,” Cindy Hounsel, 2008.
ii “Ernst & Young letter to ASR updating the Retirement vulnerability of new retirees ,” Februrary 2009.
iii “Ernst & Young letter to ASR updating the Retirement vulnerability of new retirees ,” Februrary 2009.
iv “Hispanics and Retirement: Challenges and Opportunities,” The Hispanic Institute & Americans for a Secure Retirement.
v “Lifetime Income Crucial to Farmer’s Retirement Security,” American Corn Growers Association & Americans for a Secure Retirement.
vi “Lifetime Income Crucial to Farmer’s Retirement Security,” American Corn Growers Association & Americans for a Secure Retirement