Changes in Racial Gaps in Retirement Security over Time

Researchers have devoted considerable attention to racial wealth gaps and to changes over time in financial preparedness for retirement. This paper explores the intersection of those issues. The average American family nearing retirement today appears to be less financially prepared than its predecessors—and because racial differences in wealth accumulation are stark, the retirement preparedness of Black families merits particular attention and concern. We examine the relative preparedness of Black and white families using data from the Panel Study of Income Dynamics (PSID), a household survey that offers a comprehensive look at defined-contribution pension savings, other types of assets and liabilities, family structure, and income and work histories. Because the PSID oversamples lower-income families, it can provide more precise estimates of the retirement preparedness of lower-income Black families than can other data sets.