Minority Seniors In Crisis
BERKELEY, CA - Older Americans of color are being financially squeezed as their earnings and savings drop and costs continue to rise, according to a report released today by The Greenlining Institute.
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African American, Asian American and Latino senior citizens are economically vulnerable and getting more so because they have less access to pensions or other forms of retirement savings,
These groups may be particularly vulnerable to the effects of cuts to Social Security and Medicare likely to be considered by the 12-member special congressional committee created by the budget deal signed this week by President Obama.
The report found that 91 percent of African American and Latino seniors are financially vulnerable. While data on Asian Americans is more sparse, some Asian ethnic groups have poverty rates three to four times that of whites.
Federal poverty standards fail to measure factors that disproportionately affect elders, leaving many who are financially struggling uncounted – and thus ineligible for many benefits.
As the “three-legged stool” of retirement security (Social Security, pensions and savings) is collapsing, the foreclosure crisis has greatly worsened the wealth gap between racial groups while budget cuts impair vital programs that assist struggling senior citizens.
“While the recession has affected all Americans, the effects have been truly devastating for Latinos, African Americans and Asian Americans hoping to retire with some dignity,” said Greenlining Institute Community Reinvestment Director Preeti Vissa. “There are concrete actions that federal and state governments can take, but the essential first step is to recognize the extent of the problem – and to immediately take off the table any proposal that will plunge our most vulnerable elders into poverty.”
“The recent recession has made the racial wealth gap worse,” says Orson Aguilar, Greenlining Institute executive director.
The disparity between haves and have-nots may widen even more if budget cuts slash low-income safety nets such as public transportation, food stamps and health care centers.
“And the foreclosure crisis will make it harder for seniors of color to get out of the economic mess that we’re in,” Aguilar says.
Nationally, nearly 8% of African-American and Latino mortgage borrowers have lost their homes to foreclosures, compared with 4.5% of whites, according to a 2010 study by the Center for Responsible Lending.
Minorities are not the only homeowners who have been hurt by subprime mortgages.
“But African Americans and Latinos were targeted with the most abusive and riskiest types of loan products,” says Debbie Bocian, senior researcher at the Center for Responsible Lending.
Plummeting home values, as well as home foreclosures, have had a bigger impact on minority wealth.
“The meltdown in housing prices disproportionately has affected blacks and Hispanics because a much higher share of their wealth is tied up in the value of their homes,” says Paul Taylor, executive vice president of the Pew Research Center.
From 2005 to 2009, the most recent national wealth data, Hispanic households saw their net worth drop 66%, while black households’ fell 53% and whites’ fell 16%, a Pew study found.
Hispanics experienced the biggest decline in wealth because many bought homes in states where the real estate market bubble had the steepest plunge in value.
Health care costs are also creating economic hardship for seniors of color. More than one-third of African-American and Latino senior households are at financial risk because their current health expenses take up 15% or more of total before-tax income, according to a report by the Institute on Assets and Social Policy atBrandeis University.
Older minorities are more likely to rely on Social Security because they also have had limited access to pensions and 401(k) plans, the Greenlining Institute report says.
It’s also harder for minorities to navigate the complex financial world because they tend to lack adequate financial literacy, the Greenlining Institute report says. For the same reason, they’re often victimized by predatory lenders that strip them of wealth and assets.
“This report shines a light on seniors of color, but it also shows that all middle-class seniors will face hard times, not only because of the recession, but also because the social safety net is unraveling,” Aguilar says. “We’re going to have to look at the basic services that seniors rely on and how we can make them accessible and affordable.”
