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Retirement savings are crucial for individuals who want to live a comfortable life during their golden years. However, not all Americans have equal opportunities to save for retirement, and there is a that affects many communities of color. In this blog, we will explore the causes and consequences of the racial retirement savings gap and discuss a possible solution with state IRA programs.
The racial retirement savings gap is the difference in retirement savings between white Americans and people of color. According to a report by AARP, among private sector employees ages ranging from of African Americans and about do not have access to a workplace retirement plan, compared with about workers and Americans.
The racial retirement savings gap has significant consequences for individuals and society as a whole. For individuals, the gap means that people of color are more likely to experience financial insecurity during retirement, which can For society, the gap means that we are not tapping into the, as people of color may be forced to continue working past retirement age or may not be able to retire at all. This can have a negative impact on the economy, as older workers may be less productive and less able to contribute to society in other ways. Due to that fact, , causing inefficiencies and less work being done individually.
There are several steps that can be taken to reduce the gap and ensure that all Americans have the opportunity to save for retirement. A of state-facilitated individual retirement savings programs attempts to close the racial savings gap. Rather than competing with large corporate retirement plans, the state’s new initiative focuses on the underserved industry of small businesses and the private sector, including bars, restaurants, and grocery stores. These state programs businesses to either offer a retirement plan or automatically enroll their employees into the state’s program. Additionally, legislators have pushed for more progress in the form of the . A proposal that would establish a federal matching contribution for lower-income workers. This match would consist of a maximum of . Essentially, for low-income workers who put away $2000, a 50-cent match for each dollar would contribute heavily to their savings.
Malaysia has a mandatory retirement savings plan for all Malaysians working in the private sector (small business). The retirement age in the private sector is 60. The shows that just over 3/4 of respondents had saved enough for retirement, and of the until after they had stopped working. Additionally, about of Malaysia is expected to be uncovered by any form of social protection, and many Malaysian citizens under the formal retirement system are expected
The percentage of retirement income that comes from pensions is much lower in Malaysia than in many other countries, .
It is clear around the world, more initiatives need to be brought to the surface in order to solve the retirement gap around the world.
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