Income inequality in the U.S. is contributing to the growth of financial insecurity in retirement, exacerbated by a shift from pensions to individual 401(k) savings accounts, according to a new report by the U.S. National Institute On Retirement Security.
It found in 2019, white households across three generations — baby boomers, generation X and millennials — owned 75 per cent or more of their generation’s financial assets, with ownership especially concentrated among white households in the top 25 per cent of net worth.
White baby boomers owned 91 per cent of their generation’s financial assets in 2019, compared to Black baby boomers (three per cent) and Hispanic baby boomers (two per cent), while the top five per cent of baby boomers by net worth owned a greater percentage of that generation’s financial assets in 2019 (58 per cent) than in 2004 (52 per cent).
“This stark inequality is even more problematic because the U.S. has largely shifted to a retirement system built around the individual ownership of financial assets in 401(k) or individual retirement accounts rather than pensions,” said Tyler Bond, research manager for the institute and the report’s author, in a press release. “Few financial assets during one’s working years translates into retirement insecurity later in life.”