Increasingly uneven accumulation of financial assets, especially for blacks and Hispanics

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The data in this report reveals that among Baby Boomers, Gen Xers, and Millennials, Black Americans and Hispanics have a low percentage of financial assets.

  • White baby boomers owned more than 90 percent of this generation’s financial assets, while black or Hispanic baby boomers owned three percent or less for the periods studied.
  • Gen X whites owned about four-fifths of this generation’s financial assets in each of the four survey years included in the research.
  • Despite being a more racially diverse cohort, white Millennials held three-quarters of this generation’s financial assets in 2019.

“A retirement system built around individual ownership of financial assets cannot provide retirement security for many if the ownership of financial assets is concentrated among a few,” says Tyler bond , author of the report and research director for the National Institute on Retirement Security.

“This blatant inequality is even more problematic because the United States has largely moved to a retirement system built around individual ownership of financial assets in 401 (k) or IRA accounts rather than pensions. Few assets. Financial resources during working years translate into retirement insecurity later in life, ”Bond explained.

He added, “The data also shows an alarming reality for blacks and Hispanics. Not only do they hold a small share of financial assets across generations, but that share is declining in some cases. Without serious political change, blacks and Hispanics are unable to improve their economic and retirement prospects. ”

The main conclusions of this report are as follows:

  • Inequalities in the ownership of financial assets persist and worsen over time. The richest five percent of baby boomers in net worth owned a higher percentage of this generation’s financial assets in 2019 (58 percent) than in 2004 (52 percent).
  • Inequality in the ownership of financial assets is constant from one generation to the next. In 2019, the richest 25% in net worth of Millennials, Gen Xers, and Baby Boomers held three-quarters or more of their generation’s financial assets.
  • The ownership of financial assets is highly concentrated among white households. In 2019, three-generation white households owned three-quarters or more of their generation’s financial assets. Ownership is particularly concentrated among white households in the top 25 percent of equity.
  • Average and median financial assets were significantly higher for white households in 2019 than for black or Hispanic households.
  • There are a range of potential solutions to address this serious inequality, including strengthening and extending social security, protecting pensions, improving access to savings plans for low-income workers, and reform of tax incentives for retirement.

This research is based on data from the Federal Reserve’s Survey of Consumer Finances ( SCF ). It examines the ownership of financial assets by net worth, generation and race, and considers three generational cohorts: Millennials, Generation X, and Baby Boomers. Millennials are assessed in 2016 and 2019, while Gen X and Baby Boomers are assessed in 2004, 2010, 2016 and 2019.

Research examines financial assets, a broader category than retirement assets. According to the SCF, the category of financial assets includes liquid assets, certificates of deposit, directly held mutual funds, stocks, bonds, near-liquid assets, savings bonds, whole life insurance. , other assets under management and other financial assets. It does not include physical assets such as a house or a car. The data from this research relates to households rather than individuals.

The National Institute for Retirement Security is a non-profit, non-partisan organization created to contribute to informed policy development by fostering a deep understanding of the value of retirement security for employees, employers and the economy as a whole. Situated in Washington DC, NIRS members include financial services companies, benefit plans, professional associations, and other pension service providers. More information is available at www.nirsonline.org . Follow NIRS on Twitter @NIRSonline .

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SOURCE National Institute for Retirement Security

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