By: Christine Dugas
August 5, 2011
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.
In California, where more than 60% of the senior population is expected to be non-white by 2050, older minorities particularly face more financial risk than whites, according to the report by The Greenlining Institute in Berkeley, Calif., a research and advocacy center.
"The recent recession has made the racial wealth gap worse," says Orson Aguilar, Greenlining Institute executive director.
Among the state's single adults age 65 and older, 76% of Latinos and 69% of African Americans are unable to meet basic needs, compared with 44% of whites, says UCLA's Center for Health Policy Research and the Insight Center for Community Economic Development.
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 at Brandeis 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."
Median net worth of households:
Whites $113,149 $134,992 -16%
Hispanics $6,325 $18,359 -66%
Blacks $5,677 $12,124 -53%
Source: Pew Research Center