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Retirement Risk Across Demographics

Retirement Risk Across Demographics. Team 4: Alayne Becker, Nicholas Chernick , Yu Fan, Samuel Houseworth , Spike Knickel , Justin Newlen , Beth Sanger, Yifan Yang. Demographics. Race Gender Socio-economic Status. Investing Strategies.

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Retirement Risk Across Demographics

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  1. Retirement Risk Across Demographics Team 4: Alayne Becker, Nicholas Chernick, Yu Fan, Samuel Houseworth, Spike Knickel, Justin Newlen, Beth Sanger, Yifan Yang

  2. Demographics • Race • Gender • Socio-economic Status

  3. Investing Strategies • All strategies involve a mix of high-risk and low-risk investments • Whites & Asian-Americans prefer high-risk, high-reward investments like stocks • African-Americans prefer low-risk investments like gov’t bonds • Lack of trust in stock market • Hispanics prefer bonds & tangible investments like real estate • Historically, whites & Asian-Americans earn a larger balance • AA’s & Hispanics lag behind because of low return of low-risk investments • These groups tend to come from family that are inexperienced in investing

  4. Health & Working Conditions • Asian-Americans tend to live longer & work in less physically demanding jobs. • Asian-Americans tend to work longer to offset the need for more retirement money • Hispanics tend to work more physically demanding jobs • Even in similar jobs, Hispanics are likely to suffer more injuries than white counterparts, less likely to file claims • African-Americans are more likely to take money out of their retirement savings to cover healthcare costs • Fewer AA’s have healthcare coverage than other races

  5. Cultural Background • Hispanics are very family-orientated, have higher marriage rates, lower divorce rate • Older Hispanic males keep work longer hours, provide more steady income • African-American have very low marriage rate, but very high divorce rate • Retirement savings habits are very positively correlated with marriage rates • Because of financial experience, whites start saving for retirement earlier • Whites, in similar salary ranges, have, on average, 50% more money saved than AA’s at any given time

  6. Gender • Salary • Women earn less and work less. • Age • Women live longer and have longer retirement period. • Inflation • Women live longer, money worth less. • Marriage • Men choose less risk, women choose more risk. • Children • More women than men have children. Choose less risk. • Healthcare • Women have more health problems.

  7. Lower Class Retirement Risk • Not having insurance coverage for worst case scenarios • Higher risk of disability • Medicare only covers a fraction of medical bills • Fewer retirement plan options due to occupation and income • Higher chance of pulling money out of retirement savings for unexpected expenses

  8. Middle Class Retirement Risk • Risk of outliving Savings • Traditional pension plans are disappearing in place of 401(k)’s • Not enough money to take on the market risk • Not educated enough to make wise investment decisions • Uncertainty with Social Security

  9. Upper Class Retirement Risk • Longevity Risk • Less likely to die from preventable causes • Greater chance of living longer than expected and depleting their savings • Stock Market Risk • Have more ability to invest in the stock market creating a greater list of losing that money due to a downturn or crash

  10. Bibliography • Lewis, Jeffrey R., and Cindy Hounsell, eds. "What Women Need to Know About Retirement." Heinz Family Philanthropies and The Women's Institute for a Secure Retirement. Web. <http://www.wiserwomen.org/pdf_files/ebook/completeebook.pdf>. • "Women and the Retirement Savings Gap - SmartMoney.com." Online Investing: Stocks, Personal Finance & Mutual Funds at SmartMoney.com. Web. <http://www.smartmoney.com/personal-finance/retirement/narrowing-the-gender-gap- in-retirement/>.

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