Hispanic and African American retirees’ income at risk of not being enough

SPRINGFIELD, MA – Nearly 45 percent of U.S. households are “at risk” of not having enough to maintain their living standards in retirement, according to the National Retirement Risk Index, a special project of the Center for Retirement Research at Boston College.

Many multicultural populations are particularly at risk: a new study by the Hispanic Institute For Americans For A Secure Retirement found that only 41 percent of Hispanic workers say they have saved money for retirement. African-Americans, too, face significant risk of outliving their incomes in retirement. In 2009, an Ariel and Schwab survey of middle and upper income Black and White retirees shows that retired Blacks have median savings of just $73,000 compared to $210,000 for Whites.

But some Hispanic and African-American retirees have discovered a source of supplemental income that can help tide them over during rough patches: their whole life insurance policies.

Many retirees and pre-retirees are counting, if necessary, on tapping the cash value of their whole life insurance policies – without tax or penalty – to see them through in a pinch. Their policies’ cash values, which are guaranteed to grow, also can offer protection against the erosion of income caused by rising inflation, declining interest rates, and higher income tax rates.