Baby Boomers of Color: Implications for Social Work Policy and Practice

A 2012 NEW YORK TIMES editorial titled “The Road to retirement: The Recession and Its Aftermath Spell Insecurity and Hardship for Millions of Americans” sums up well the status of millions of baby boomers as they face retirement and is the focus of this chapter: “The crux of the problem is that as traditional pensions have disappeared from the private sector replacement plans have proved woefully inadequate. Fewer than half of the nation’s private sector workers have 401(k) plans, and more than a third of households have no retirement coverage during their work lives…. Nor do most Americans have significant wealth to fall back on…. Home equity, once thought of as a cushion in retirement, has been especially devastated” (New York Times editorial 2012, p. 10).

Wealth and income play an influential role in dictating expectations and quality of life in retirement and are closely associated with health and well-being. Wealth is often thought of as an important indicator of economic well-being because of how well it captures accumulation across generations, and this perspective has particular relevance for older adults and boomers of color (T. Brown, 2012).

Wealth, however, is a topic that is easily as complex as health and must, as a result, be viewed from a multifaceted perspective in order to fully grasp its significance in the life of boomers and their various subgroups (Love, Smith, & McNair, 2008; Wolff, 2007). In 2009, for example, it was estimated that 33 percent of all boomers were unmarried, with 10 percent being widowed (Lin & Brown, 2012). Unmarried boomers, when compared to their married counterparts, face greater economic, health, and social disadvantages as they are about to enter older age. In addition, wealth and income also wield symbolic influence, and baby boomers are not exempt from this symbolism.

Becker (2011) examines the current state of boomers and how their goals for retirement may be compromised:

As we look at our retirement years, we Baby Boomers are facing a prospect we never would have imagined when we were in our 20s. If we’re not careful, we could be the first American generation in a long time to do less well than our parents did in terms of retirement security and enjoyment. Boomers came of age when “30 years and out” with a gold watch and a pension were common. We watched our grandparents retire on Social Security and their own pensions, and even though not many of them lived very long after they retired, those years were pretty free of financial worries. But now we Boomers are facing a potential bust. We’ve watched our property values go down as fast as our portfolios. Most of us have had several jobs, particularly in the past 20 years—our employers aren’t loyal to us, and we certainly can’t afford to be loyal to them. Pensions are mostly history, and Social Security may well be before we die.

(Becker, 2011)

Perlman, Kenneally, and Boivi (2011) sum up the precarious state of boomers about to enter retirement: (1) the number of private sector employees with access to conventional pension plans has dwindled from 88 percent (1975) to 33 percent (2005), (2) increases in Social Security retirement age has resulted in lower benefits for lower income boomers who rely heavily on this source of income, (3) in 2009 401(k) accounts had a medium balance of only $59,381, and (4) only 59 percent of American workers have any form of access to employer-sponsored retirement plans and fewer than 50 percent (45) participate in these retirement plans.

Boomers of color, furthermore, are entering this life stage with distinct income and wealth disadvantages, thereby compromising their retirements (Ghilarducci, 2012; Wallace & Villa, 2009). As initially addressed in chapter 1, income and wealth resulting from owning a home and having a high formal level of education were compromised for older adults of color because of systematic racial discrimination for both ex-veterans and nonveterans. Accumulated wealth, as a result, can not be transferred to boomers of color. Consider the following statement by an African American baby boomer:

All my life I’ve heard and read about the power, clout and influence that the “baby boomer” generation has had on the culture and direction of American lifestyle and media. I bought into that for the most part but looking back I can see that this was not necessarily the case for a large portion of baby boomers. I’m talking about the African American baby boomer. I mean this generation was supposed to have lived the most charmed life and enjoyed the greatest perks of any group in American history. While I will admit that my generation had it much easier than my parents and grandparents, Black baby boomers haven’t exactly had it made. What’s worse is that now that we are entering what should be the “golden” years things for a lot of us are bad and may get worse. I know, I know. This economy has had an adverse effect on all of us but having historically been the “last hired/first fired” simply because of our race usually meant that it took us longer to gain any real economic security or job tenure in the first place. Many of us have lost our jobs and had to dip into whatever saving we may have had. Okay, we’re used to having to start over from scratch but let’s be honest, we’re not as young as we used to be. We don’t have years to work ourselves up from the bottom. Sure going back to school is an option but then when we graduate we’re competing with thousands of younger graduates that’ll be more than happy to take a salary less than what we would expect. Besides, although it’s supposed to be illegal I KNOW that age discrimination exists when it comes to hiring. I’ve actually had an interviewer tell me “You’re not as young as most applicants I have for this position.” Never mind that he could clearly see on my resume that I had done that kind of work for over 10 years at some of America’s top companies. Of course I didn’t get the job.

(Anonymous, 2010)

Unfortunately, the assessment is not atypical. Boomers of color are generally associated with characteristics of income insecurity, food insecurity, and health disparities (Johnson & Wilson, 2010a). Their “golden years” will be anything but.

This chapter seeks to ground the reader in the financial world and economic circumstances of boomers by examining, to the best of our ability based on available data, their economic status, streams of income, and financial expectations upon retirement. The chapter will end by posing the question whether retirement is even a viable option for many boomers of color.

BABY BOOMER FINANCIAL POWER

Baby boomers are not only the fastest-growing demographic sector in the country, but are also widely considered the wealthiest, healthiest, most vigorous, and best formally educated soon-to–be-older adult group in the history of the United States. However, this generalization is certainly not true for the vast majority of boomers of color. This group faces incredible challenges transitioning to retirement.

Boomers control vast wealth in this country. In 2005 they were estimated to spend $2 trillion annually (Business Wire, 2005). They are responsible for approximately 50 percent of all discretionary spending in this country. The United States Census Bureau estimated that in 2009 boomers owned approximately $13 trillion in assets, or 50 percent of all the wealth in the United States, thereby the largest asset-owning age group in the country. Visa estimates that boomers will be responsible for $2.45 trillion in spending by the year 2015 (Business Wire, 2007).

Boomer purchasing power gets manifested in a myriad of ways that we normally do not think about. For example, they are responsible for 61 percent of all over-the-counter medications and 77 percent of all prescription drugs, which is not surprising considering the problem with prescription abuse covered in chapter 5. They also account for 80 percent of all leisure travel in the country (Baby Boomers Generation, 2009). Mutual funds had $55 billion when boomers started entering the workforce in 1971; at the end of 2010 these funds had grown to $10.7 trillion, with $4.1 trillion in retirement accounts (Waggoner, 2010).

Thus we see that, as a cohort, baby boomer income and wealth are considerable, although upon closer examination not all subgroups have shared in this prosperity (Holden, 2009; Holzer, 2008; Mutchler & Burr, 2009; Penner, 2008b; Wolff, 2007). We will now turn our attention to those boomers that live on the other end of the financial spectrum.

BABY BOOMERS AND POVERTY

The poverty rates for boomers of color are dramatically higher when compared to their White, non-Latino/a counterparts, and this will severely compromise their transition to retirement (Jacobsen et al., 2011).

Asians (11.6 percent) have the lowest poverty rates of the three major boomer groups of color. African Americans (18.6 percent) and Latino/as (15.5 percent) have rates almost double (7.7 percent) that of White, non-Latino/as (Johnson & Wilson, 2010b). Issa and Zedlewski (2011) found that among older adults aged sixty-five to seventy-four years, African Americans (8.4 percent) and Latino/as (7.3 percent) had poverty rates considerably higher than their White, non-Latino (6.6 percent) counterparts, with Asians having the lowest rates (3.5 percent) of any group. These figures are lower by more than half those of boomers of color.

The poverty rate among Latino/a older adults, for example, is 20 percent, and the highest rate in the country for older adults (Richman et al., 2008).

Employment and Income

The quality of life of boomers in, or near, poverty stands to be further compromised by the recent recession because it limits the options for those boomers wishing to supplement their incomes through employment. Unfortunately, U.S. Census data on employment rates among boomers of color are severely limited. Yet we can examine how the recession has impacted employment levels among boomers of color as an example (Gassoumis et al., 2010).

All boomers were hurt by the recession. Unemployment among this cohort doubled from 3.0 percent in 2007 to 7.1 percent in 2009, reflecting the recession’s impact (General Accountability Office, 2011). In addition, the report found “that an estimated 25 percent of adults 50 and over had exhausted their savings in response to a layoff or other recession-related event, and half in that age group say they had delayed a medical or dental procedure to make ends meet. Meanwhile, the normal safety net of home equity has been decimated by the housing bubble collapse.” Median duration of unemployment almost tripled from eleven to thirteen weeks during the 2007–2010 periods for boomers. Not surprisingly, their median household income dropped by 6 percent during that period.

Johnson and Mommaerts (2010a) studied the impact of the most recent recession on older adults and found that baby boomers on average numbering 1.5 million workers were unemployed each month in 2009, which was more than double the number in 2007. This translates into an unemployment rate of 7.2 percent for baby boomer men and 6.0 percent for women.

Boomers and older adults in the construction, manufacturing, and leisure and hospitality industries were particularly hard hit and are expected to take longer to recover too (Johnson & Mommaerts, 2009; Johnson, Mommaerts, & Park, 2011). These sectors traditionally employ a large number of boomers of color.

The 2009 unemployment rates were much higher among older African Americans and Latino/as. For men, approximately 11 percent of Latinos and 10 percent of African American workers were unemployed, compared with 6 percent of White, non-Latinos. Losing employment has significant ramifications for the health of Latino/a baby boomers, for example, with over one-third reporting having to reduce their medications because of costs and 20 percent of those unemployed having lost their health insurance (New American Media, 2010).

The socioeconomic-political context in which boomers of color grew up as they entered the labor force, as a result, continues to shape their entrance into retirement:

A typical adult approaching retirement in 2010 was born around 1945 and may have entered the workforce in mid 1960s at a time of racial segregation in schools and communities, little access to college for people of color and employment opportunities with no pension or retirement savings benefits, or even Social Security for African-American and Latino workers. Despite having witnessed much progress, people of color face great barriers to economic opportunities which shaped their life trajectories and continue to shape their economic realities. Past discriminations and current economic realities have long-term economic implications for people of color that are entering retirement today in a more unstable position than their white counterparts.

(Meschede et al., 2011, p. 3)

African American baby boomers, for example, earn two-thirds of what their White, non-Latino/a counterparts earn (Fears, 2004). They are the first generation to come of age after the passage of the Civil Rights Act, yet income and wealth disparities still have not closed since that historic legislation. Further, the Center for Economic and Policy Research (Fremstad, 2011) estimated that approximately 40 percent of African Americans aged fifty-eight years or older work in physically demanding jobs, and 33 percent do so under difficult work circumstances. This has profound outcomes for health as well as wealth. Finally, we have a very limited understanding of boomers of color and the informal economy, which may supplement their formal earnings (Delgado, 2011) and help mitigate their dire economic circumstances.

Median Income: According to the Social Security Administration (2012), the median income of White, non-Latino/as sixty-five and over is almost double that of Latino/as ($27,214 versus $14,400) and 60 percent greater than that of African Americans ($16,463), and 66 percent of Asian and Pacific Islanders ($17,977). Not surprisingly, low median income for boomers of color represents the sum total of inequality across the life span:

Inequality across the life course will be compounded in old age. For seniors of color, who faced labor market discriminations and restricted access to asset-building opportunities through formal and informal means during their working years, the retirement years are likely to be characterized by economic insecurity and significant challenges to making ends meet…. While today’s people of color do not face the same levels of overt discrimination as their parents did, segregation and discrimination remain barriers to economic equality across the life course.

(Meschede et al., 2011, p. 3)

This disparity impacts the ability of boomers of color to achieve economic security and well-being in retirement, just as it has throughout earlier stages in their lives. It further impacts their ability to financially assist their relatives and support local businesses in the community. In essence, income disparities cannot be measured or understood solely from an individualistic perspective.

Baby boomer assets fall into three general categories: (1) Social Security; (2) private wealth, such as bank accounts, real estate investments, homes, inheritances; and (3) private retirement accounts, such as 401(k) funds (Skinner, 2009). Each of these will be analyzed in turn over the course of this chapter.

Reliance on Social Security

The importance of Social Security as a key source of income for boomers varies across racial and ethnic groups. The debates about Social Security solvency and the proposed reforms, as a result, take on varying degrees of urgency depending on a host of factors.

Figure 6.1 shows how the major racial and ethnic groups compare in getting their income from sources other than Social Security. It should not come as any great surprise that Social Security constitutes a major portion of retirement income among African Americans (95 percent) and Latino/as (85 percent), as compared to White, non-Latino/as (80 percent) (Rockeymoore & Maitin-Shepard, 2010).

FIGURE 6.1. Percentage receiving income from major sources by race and Hispanic origin, 2010.

Source: U.S. Social Security Administration, Office of Retirement and Disability Policy, Income of the Aged Chartbook, 2010.

Boomers of color with lifetime low-wage employment are severely limited in obtaining their post-retirement income from sources other than Social Security because of a lack of investments and participation in private pension plans (Gassoumis, Lincoln, & Vega, 2011; Holzer, 2008; Meyer, 2009). Consequently, discussion of Social Security reforms, as covered in chapter 2, will impact them more than those with multiple sources of post-retirement income (Commission to Modernize Social Security, 2011).

A high proportion of baby boomers of color live in poverty and as a result, either currently or eventually, will rely heavily upon Social Security as either their primary or almost exclusive source of income (American Association for Retired Persons, 2004a; Halliwell, Gassoumis, & Wilber, 2007; Kim & Torres-Gil, 2011; Meschede et al., 2011). In 2009, for example, 36 percent of all married older adult Latino couples, and 62 percent of those who were single, depended upon Social Security for 90 percent or more of their income (Social Security Administration, 2011b). Social Security was the only form of income for 40 percent of all Latino/a older adults. In other words, it was their lifeline.

African Americans, too, rely heavily upon Social Security, with 40 percent of households having this as their only source of income, and almost 50 percent relying on it for 90 percent of their incomes (Fleck, 2011). Among Asian and Pacific Islanders, 27 percent of those who were married and 48 percent of those who were single relied on Social Security (Social Security Administration, 2011d). In 2009 45 percent of American Indians receiving Social Security relied on this form of income for 90 percent of their total income (Social Security Administration, 2011e). Finally, 29 percent of married couples and 56 percent of those who were unmarried received 90 percent or more of their income from Social Security (Social Security Administration, 2011c).

The incidence of disabilities, lifetime earnings, and mortality are three factors that are influential in determining how much individuals pay into Social Security and the benefits derived from the system (General Accounting Office, 2003). Low Social Security payments are highly associated with recipients of color, particularly those who are Latino/a and foreign born who have the highest rate of living below the poverty level (52.8 percent), followed by African Americans with 43.2 percent (Favreault, 2010).

Favreault (2009), in a 2009 testimony to the Senate Special Committee on Aging, specifically addressed the needs of low lifetime earners and the oldest of the old, as well as the need to bolster benefits. In addition, she pointed out that addressing the solvency question is not an “arithmetic problem” since tax increases and cuts in benefits impact workers and beneficiaries in dramatically different ways. Introducing minimum benefits is one way of successfully improving the economic status of lifelong low-wage workers and, in the process, helping reduce the poverty rates among older adults and soon-to-be retirees. The impact of such a reform will be profound for the families of these beneficiaries and the neighborhoods they live in too.

The current debates about Social Security, as addressed in chapter 2, cause a great deal of anxiety among current and future boomer beneficiaries who will rely almost totally upon this as a source of income, particularly those who are lifelong low-wage earners (Acs & Nichols, 2007; Yang & Barrett, 2006). Fry and colleagues, for example, show how this debate has specific consequences for Latino/a boomers:

Latinos have distinct demographic and economic characteristics that give them a unique stake in the debate over the future of Social Security. First, they are younger on average than the remainder of the U.S. population, which means that, as a group, their future as Social Security contributors and beneficiaries will be different from the future of non-Hispanics. Second, Hispanic workers tend to hold lower-paying jobs than the average U.S. worker and are less likely to have an employment-based pension. At all ages of adulthood Hispanics have lower average incomes and have accumulated less wealth than their white counterparts, and Hispanics currently over the age of 65 rely very heavily on Social Security retirement benefits as a source of income. For all these reasons, the nature, extent and timing of any changes to Social Security would have specific and distinct consequences for the Hispanic population.

(Fry et al., 2005, p. i)

The social forces that impinge on Latino/a boomers have deep historical routes that are manifested as Latino/as enter retirement age. Similar and additional social forces, too, are faced by the African American, Asian American, and Native Americans baby boomers who are heavily reliant on Social Security for their economic survival.

Private Wealth

Social Security was never envisioned to be the only source of retirement income. Most retirees would be challenged to live on it as their sole, or principal, source of income. Accumulated wealth and other sources must be present to help baby boomers have economic security in older adulthood. Five primary sources of wealth and income will be addressed in this section: (1) home assets, (2) investment income, (3) employment, (4) savings, and (5) inheritance.

In general, wealth accumulation among boomers of color is low compared to their White, non-Latino/a counterparts, particularly because of histories of low formal educational attainment and relegation to low-wage employment (Johnson, Haaga, & Simms, 2011). Marital history also influences wealth; boomers who are married enjoy stronger economic footing than those who are single. Single women, for example, have received lower pay than men over a lifetime, resulting in lower Social Security benefits and lower pensions (Wheary, 2011). Pre-retirement wealth accumulation of older African American women, for example, is greatly influenced by differences in marriage (never married, divorce, widowhood) over the life course, reenforcing patterns of inequality in older adulthood (Addo & Lichter, 2010).

Private wealth is also greatly impacted by financial literacy and/or access to sound financial guidance, which many boomers may not have. Older adults, in general, are subject to increasing abuses from the financial services industry (Catalano & Lazaro, 2010), such as taking on predatory loans, which can undermine their already precarious economic situation. The targeting of racially segregated neighborhoods where boomers of color most likely live has further exacerbated their precarious economic position. As noted, financial illiteracy is another important factor (Lusardi & Mitchell, 2011; Mitchell, Lusardi, & Curto, 2009). Sadly, it is estimated that financial literacy declines by 2 percent for every year past sixty (Finke, Howe, & Huston, 2011). In addition, a high percentage of African Americans and Latino/as are unbanked (meaning they have no formal accounts or relationships with banks), thus limiting their access to banking services that can assist them in retirement (Delgado, 2011; Lusardi, 2011).

Home Assets: Much of the national attention of the pending wave of boomer retirement has focused on the impact on federal expenditures. However, the housing sector, too, will be transformed in dramatic fashion (Painter & Lee, 2009). Home assets are considered the greatest source of wealth for the average family in this country. Homes often can be tapped for securing loans and lines of credit to meet a wide range of expected and unexpected expenses. Consequently, it is appropriate to start an analysis of wealth with these assets for an in-depth understanding of boomer worth.

In 2006, almost 80 percent of boomers owned their own home and 25 percent owned at least one other form of real estate (Heavens, 2006). Yet the housing crash changed that dramatically. Rosnick and Baker sum up the current state of baby boomer housing assets: “As a result of the plunge in house prices, many baby boomers now have little or no equity in their home. According to our calculations, of those who own their primary residence, nearly 30 percent of households’ headed by someone between the ages of 45 to 54 will need to bring money to their closing (to cover their mortgage and transactions costs) if they were to sell their home. More than 15 percent of the early baby boomers, people between the ages of 55 and 64, will need to bring money to a closing when they sell their home” (Rosnick and Baker, 2009, p. 1). Thus for many boomers these assets have evaporated as the result of the housing bubble during this past recession.

The recession of 2008 caused a tremendous loss in home equity across all age groups. It is estimated that approximately $6 trillion in equity was lost overall, resulting in almost 13 million individuals owing over $660 billion more on their homes than their homes were worth (New York Times, 2012).

The impact of the housing crash was particularly severe for baby boomers (T. Brown, 2012; Rosnick & Baker, 2009, 2010; Baker & Rosnick, 2009). An estimated 30 percent of boomers were “underwater” in their homes in 2009 (Christie, 2009). Further, 28 percent of those fifty years and older were delinquent in mortgage payments or in the process of foreclosure (Bruin et al., 2011). However, boomers with higher formal education, owning homes that had appreciated significantly, and with higher incomes were most likely to be in a financial position to draw upon housing equity and refinancing (Gist, Figueiredo, & Verma, 2012). The crash was far more devastating among boomers of color (Trawinski, 2012). Latino/a median level of home equity fell by 51 percent ($99,983 to $49,145), followed by Asians with 32 percent ($219,742 to $150,000), and African Americans by 23 percent ($76,910 to $59,000) in 2009. Among White, non-Latino/as, it fell by 18 percent, from $115,364 to $95,000 (Taylor, Fry, & Kochhar, 2011).

The Center for Responsible Lending summed up the impact of the housing crisis on communities of color: “We have estimated that two million families have lost their primary homes and that African-American and Latino/a borrowers have borne and will continue to disproportionately bear the burden of foreclosures…. Foreclosures will likely continue to grow substantially while continuing to have a disproportionate impact on communities of color” (Bocian, Li, & Ernst, 2010). Baby boomers of color, by having the majority of their wealth tied into their homes, have been put at further economic risk in their retirement. These boomers often live in segregated areas where home assets are significantly lower than those in White, non-Latino/a sectors. Not surprisingly, their homes have not appreciated at the rate as those of their more affluent counterparts, making the impact of any loss in home value that much more devastating.

Becker (2010) addresses a disturbing trend among boomers who are desperate to hold on to their financial security: the reverse mortgage industry. Reverse mortgages have become popular among seniors who receive payments from the bank against the equity in their homes. Essentially, what they are doing is pawning their homes. The value of the house, which might have been passed on to the next generation, instead is paid to a bank or mortgage company. “Twenty years ago, they predicted that the ‘great wealth transfer’ would take place when the Boomers passed their homes and estates on to their children. Now it is going to the mortgage companies, not to the families” (Becker, 2011).

It is also important to note the percentage of baby boomers who are homeless. Life in the streets is harsh regardless of age. However, homelessness in older adulthood brings with it dire health consequences, particularly for those residing in neighborhoods that provoke distress (Rudolph et al., 2013). In a New York City study of the homeless, baby boomers represented a significant portion of the adult population, and they bring needs that are both similar to and different from those of other age groups (Culhane et al., 2013).

Investments: Investment income can be an important source of income and security in retirement. As with housing, however, the 2008 economic recession has impacted baby boomers in general and boomers of color in particular. It is estimated that individual investors lost—at minimum—$113 billion during the recent financial market collapse, with boomers and older adults suffering significant losses (Wasik, 2011).

Employment: For some baby boomers, retirement is a time to reinvent themselves through higher education (Cruce & Hillman, 2012; Fabrikant, 2013), starting new careers and even new businesses (Kelly, 2013; Olson, 2013; Pethokoukis & Brandon, 2006; Zipkin, 2013). Part-time employment is also an option: Prynoos and Liebig (2009) argue that an increased availability of part-time work has made it easier for boomers and older adults to continue working and thus supplementing their income. Another option, however, is to simply postpone retirement and continue employment in their current position (Toossi, 2009).

Raising the retirement age has been suggested as a way of relieving the immediate burden on Social Security, as addressed in chapter 2. However, a number of scholars have argued against this potential solution (Aaron, 2011; Coile & Gruber, 2007; Kurtzleben, 2011; Steuerle, 2011). Such actions serve only to increase the benefits retirees eventually receive because of later retirement (Tanner, 2001). However, lower-income workers would benefit from staying in the labor pool past retirement age (Butrica, Smith, & Steuerle, 2006). Moreover, the Social Security crisis cannot be solved by cutting benefits and raising taxes either because such actions will have a disproportionate impact on the most vulnerable of boomers and older adults (Estes et al., 2009a; Howard, 2010).

Nevertheless, even if baby boomers want, or need, to work past their retirement age, it does not mean they will be given the option to do so by their employers (Maestas & Zissimopoulos, 2010). Boomers with high formal education levels, and corresponding skill sets, may have that option. However, those whose jobs are physical in nature and do not require high educational attainment or skill sets may not (Mermin, Johnson, & Toder, 2008). This, unfortunately, is the case for many lifetime low-wage boomers of color in this country (Acs & Nichols, 2007). Approximately 12 percent of all boomers have no high school diploma: 17.6 of African Americans fall into this category, 19 percent of Asian Americans and Pacific Islanders, and 40.9 percent of Latino/as (Wallace & Villa, 2009). (Those with low formal education are at an increased earnings disadvantage throughout the lifespan (Butrica, Smith, & Iams, 2012). According to the United States Census Bureau, the lack of formal educational attainment translates into a significant lifetime income gap (DeNavas-Walt, Proctor, & Smith, 2012). The difference between the annual earnings of someone with an eighth grade formal education and someone with a professional degree is almost $72,000 a year (Hispanic PR Blog, 2011).

Further, the Age Discrimination in Employment Act is predicted to face increased challenges as employers wishing to cut costs increasingly turn to younger workers instead of the older workers who wish to hold onto their jobs (McCann & Ventrell-Monsees, 2010; Neumark, 2009; Poytheway, 2012). Neumark and Song (2011) researched age discrimination and found that states with strong age discrimination laws benefited workers “caught” in the increases of Social Security Full Employment Age this past decade.

Finally, as already noted, boomers of color are often concentrated in jobs that are physically demanding and possibly unsafe as well. The health issues that typically arise with age may mean that boomers cannot hold these jobs as long as they might like.

Savings: Many individuals and families like the comfort of being able to draw upon savings during times of crisis. However, baby boomers have a low savings rate. Their savings rate went from 10 percent in the mid-1980s to approximately 2 percent in 2008 (Beinhocker, Farrell, & Greenberg, 2008). Savings averaged $18,000 in 2010 or a decrease of over 50 percent from 2004 (Ecker, 2012). Consequently, drawing upon this source of money, including interest, cannot be considered a steady revenue stream for a majority of baby boomers.

Access to interest income often represents an essential component of wealth and a retirement portfolio. Approximately half (52 percent) of all households receive interest income (Meschede et al., 2011). However, it, too, is not evenly distributed across race and ethnicity, with White, Non-Latino/as over the age of sixty-five (52 percent) having the greatest access, followed by 22 percent among African Americans. Savings among Asian and Latino/a boomers and older adults are considerably lower than those of their White, non-Latino/a counterparts (Burr et al., 2008–2009). Access to dividend income is even more rare among older adults, with 22.5 of all older adults receiving this form of income, but more so among African Americans, with only 5.2 percent receiving this form of income (Meschede et al., 2011).

Inheritance: Inherited wealth is another potential source of wealth disparity (Strand, 2010). The potential of intergenerational transfer of money (inheritance) to assist baby boomers in their retirement, however, has taken a serious decline because of the economic recession, increased lifespan of their parents, increased medical costs, and a severe decline in housing values (Munnell et al., 2011). Low-income boomers of color, unfortunately, are not in a position to inherit wealth, nor are they in a position to leave wealth to their families upon their death, thereby perpetuating inheritance inequality over generations (Angel, 2008; Angel & Mudrazija, 2010). Histories of racial discrimination in housing, education, and employment has compromised older adults of color transferring wealth to their children, further putting boomers of color in a difficult financial state (Ross & Levine, 2012).

Private Pension Plans

Retirement accounts and private pension plans, in the case of those who are in institutions that offer them, often represent important parts of a retiree’s wealth. In 2010, retirement savings averaged $42,000, a decrease from $45,000 in 2004 (Ecker, 2012). Participation in defined benefit pension plans (those that pay a lifelong annuity based on employment longevity and final salary) declined steadily from 38 percent in 1980 to 20 percent in 2008. However, participation in defined contribution pension plans (worker contribution) increased from 8 percent in 1980 to 31 percent in 2008 (Butrica et al., 2009). This shift from employer to employee contributions increases the likelihood of these plans being severely underfunded.

There are significant differences in retirement plan usage across racial and ethnic groups (Butrica & Johnson, 2010). For one thing, many baby boomers of color have not attained the same level of formal education as their white non-Latino/a counterparts and have thereby been relegated to manufacturing and service professions. Their jobs (as opposed to careers) rarely offer pension plans. In 2006 it was estimated that 50 percent of all boomers had a company-sponsored pension plan (Moore, 2006). For African American workers, their participation decreased from 45.8 percent in 1979 to 37.5 percent in 2006 (Meschede et al., 2011). Among Latino/as, only 40 percent participated in pension plans (Fry et al., 2005). In 2011 the level of access and participation in company pension programs diminished.

Overall, it is currently estimated that 59 percent of all full-time employees have access to a company retirement plan. However, only 54.4 percent of those aged twenty-five to forty-three do so, representing a disturbing trend on the part of companies not to offer retirement plans. This is even more pronounced among workers in the lowest quartile with 38.4 percent having access to such plans (Hiltonsmith, 2010). In addition, they do not have access to expertise to help them navigate the world of finances, which more privileged boomers often have (Prudential, 2011).

And as with all other forms of wealth discussed in this chapter, the 2008 economic recession has caused a considerable loss of investment in most boomers’ pension plans. The values of IRA and Keogh accounts among African Americans dropped by 13 percent from $17,319 in 2005 to $15,000 in 2009, along with corresponding drops in thrift accounts from $15,382 to $11,000 or 28 percent (Taylor, Fry, & Kochhar, 2011). The extent of this drop to the current day is unknown because of a lack of data. However, it is safe to assume that it has not fully recovered. Latino/as and White, non-Latino/as, however, did not experience such a precipitous drop. IRA and Keogh accounts increased slightly during this period and median value of 401(k) decreased slightly for both groups. Asian households experienced an increase of 19 percent in the median value of their stocks and mutual funds, from $25,270 in 2005 to $30,000 in 2009, but lost 12 percent of the value of their 401(k) and thrift accounts during this period (Taylor, Fry, & Kochhar, 2011). It is important to note that boomers with low incomes receive relatively little tax benefits from participating in 401(k) plans, unlike high income workers who can forgo the earnings in favor of tax benefits (Toder & Smith, 2011).

Finally, access to retirement funds represents an immediate source of income in emergency situations for those who have no other safety net. Thus, in the case of African-Americans, even when they participate in 401(k) programs they are three times more likely to withdraw funds than White, non-Latino/as (Prudential, 2011), which compromises their tax status and retirement goals.

IS RETIREMENT A VIABLE OPTION?

This is the critical question facing boomers of color. Is retirement an option? And, if so, what sacrifices will be required in order to live on a greatly reduced income? Obviously, the answer to this question goes beyond finances, although there is no denying the influence of economics (Tang, Choi, & Goode, 2013). The concept of “cumulative disadvantage” captures the impact of various factors, such as ethnicity/race, marital status, formal educational attainment, health, wealth/debt, and participation in pension plans. They interact with each other to create a favorable or unfavorable foundation from which to decide on retirement. In the case of boomers of color, this cumulative disadvantage has been inherited from their parents because of their lack of access to the same opportunities as their White, non-Latino/a counterparts, as addressed in the accumulation of wealth.

Grandich identifies three key reasons why baby boomers will continue to face financial hardships unless there are dramatic changes in the country:

First, is their ability to live off their investments. Baby Boomers were raised to believe that if they saved enough during their working years, when they retired they could live off the interest of their savings. Obviously, with interest rates on CDs at 3 percent or less, that’s no longer true. To make matters worse, they “chased yield”—trying to make up some of their losses on riskier investments like real estate, which tanked even harder. The second thing that has clobbered the Baby Boomers financially is the decline of their two most important investments: their stock portfolios and their homes. Everybody knows what happened there. Boomers planned on cashing in when they liquidated homes and stocks, which are now worth a fraction of just a few years ago … and they do not have the years to wait for a rebound. Finally, they always knew that no matter what, they’d have good, affordable health care, thanks to government-sponsored programs like Medicare and Medicaid. Yet, the only conceivable way forward from here is a dramatic change in the way medical coverage is provided, which will impact seniors financially and physically.

(Grandich, 2010)

Grandich’s conclusions about boomer financial prospects are sobering. However, the financial picture is far more disastrous for lifelong low-wage boomers of color when compared to their middle-class and upper-middle-class counterparts.

Financial security is a vital part of a quality-of-life equation for boomers (Johnson, 2008). The National Council on Aging summarizes the economic challenges they face: “The current economic downturn has had an impact on older adults nearing retirement. Employment and unemployment, pension changes, housing assets and debt, and health insurance and health care costs all play a part in how financially secure older adults are as they move into their retirement years” (Johnson & Wilson, 2010b, p. 7). Recent estimates have boomers retiring at least five years past their expected retirement age (Hicks, 2011).

Those closest to retirement age have less time to recover from any recent financial losses. Older women and people of color are particularly vulnerable, with higher poverty rates and lower levels of home equity than their white, male counterparts. When using the Senior Financial Stability Index to measure financial well-being, 76 percent of African Americans and 85 percent of Latino/as do not have sufficient financial resources to cover projected lifetime expenses. This compares unfavorably with White, non-Latino/as with 27 percent (Wheary & Meschede, 2010).

Anxiety about being able to afford retirement is prevalent among baby boomers. A November 2011 poll found that 53 percent did not feel confident that they would be able to afford retirement; this represents an increase from 44 percent in a similar poll in March 2011 (CBS, 2011). Seventy-three percent plan to work past the retirement age, an increase from 67 percent in the March poll. The March 2011 poll found that 55 percent were either somewhat or very certain about being able to retire with financial security, but 44 percent stated that they had little or no faith that they would have enough money upon retirement (Fram, 2011). In fact, one in four expects great difficulty in paying their bills upon retirement.

Another 2011 survey conducted by the ING Retirement Research Institute (Hannon, 2012) found similar results. In this poll, Latino/as were most likely to say that they were not prepared for retirement (54 percent), with African Americans (50 percent), White, non-Latino/as (48 percent), and Asians (44 percent) following. These feelings serve as an indicator of potential future difficulties in managing the difficult transition to retirement.

A 2008 analysis found that 69 percent of boomers cannot maintain 80 percent of their peak pre-retirement spending and are thereby unprepared to retire (Beinhocker, Farrell, & Greenberg, 2008). Munnell, Webb, and Golub-Sass (2009) found that 50 percent of households in 2009 would not be able to maintain their pre-retirement standard of living upon retirement, when and if they continued to work to age sixty-five. Postponing retirement, as a result, not only increases their worth and income but also continues to fuel the overall economy through their spending.

A 2011 Prudential study of African American boomers found that 60 percent had less than $50,000 in company pensions. Not surprisingly, only 20 percent said that they believed they were “on track” to achieve savings for retirement.

Flynn concluded that the “truism [is] that the older workforce is a wide range of workers whose experience in work impacts on their attitudes toward and planning for retirement. Policy makers cannot, therefore, take a ‘one size fits all’ approach to designing incentives for delaying retirement. This diversity could be of advantage to policy makers” (Flynn, 2010, p. 322). The call for a nuanced approach to policy resonates even further when examining boomers of color.

Hodge (2006) examines gender and concludes that “baby boomer women are in trouble.” As noted earlier in this book, women have a longer life expectancy than men, have histories of being underpaid when compared to men, and as a result are in a very vulnerable economic position upon retirement (Wheary, 2011). Their status necessitates gender-specific services.

Unlike any other time in our nation’s history, unless there are dramatic policy shifts, in terms of absolute numbers, baby boomer women, most particularly minority women, will find their elder years to be a “never ending” struggle. After selflessly caring for their children and aging parents, a significant number of our country’s 40 million plus boomer women will not be able to afford to retire, will fall below the poverty line and experience financial insecurity and poorer health in their later years with limited aid from traditional safety nets.

(McCourt, 2008)

Unfortunately, old age and retirement will clearly not constitute “golden years” for countless numbers of baby boomers of color. Their economic situation places them in an at-risk category for severe economic hardships and the social and health consequences associated with a low income level.

After this grim assessment, part 2 provides a positive and hopeful view of baby boomers of color and their potential contribution to their communities and society. The three chapters that comprise part 2 examine a variety of ways that these boomers can continue to play active and meaningful roles in their immediate family and community. The following chapter provides a conceptual foundation for identifying assets and the rewards and challenges social workers will encounter in tapping these important resources in service to boomers of color and their respective families and communities.