White workers in Colorado are 30 percent more likely to work for an employer that offers a workplace retirement plan.
By PAT FERRIER, The Coloradoan
FORT COLLINS, Colo. (AP) — Every Tuesday and Thursday, Lupe Gonzalez helps Volunteers of America prep lunches for fellow seniors at the Northside Aztlan Center in Fort Collins.
She brews coffee, checks reservations, orders supplies and helps clean up afterward. There’s no charge for lunch, though a small donation is requested from those who can afford to pay. As a volunteer, Gonzalez gets her meals for free.
Those meals, which usually yield leftovers, help Gonzalez stretch her budget far enough to cover her monthly rent and gas costs.
Gonzalez, 71, spent decades working three jobs to support her family. But when disability ended her earning years, Gonzalez was struck by the reality that she hadn’t saved enough to support her own needs in retirement.
Gonzalez is among the nearly 6 percent of Larimer County seniors age 65 and older living in poverty — 2,196 residents whose primary financial support comes from Social Security and public assistance. She’s also among a group who fare worse than their peers, as 17 percent of Hispanic retirees in Larimer County are living in poverty, according to U.S. Census data.
Nationwide, Hispanic and African American households have average retirement savings of $30,000, one-fourth of the $120,000 saved by white households, according to a 2013 report from the National Institute on Retirement Security.
Those realities are expected to strain social and senior services in the United States for decades, as even families on the high end of that savings range face monthly retirement income in the hundreds of dollars when thousands are often needed. An average of 10,000 Baby Boomers are expected to reach age 65 each day for the next 20 years, and about half of them have failed to save enough, if anything, to meet their basic retirement expenses.
While it’s too late for Gonzalez and her peers to improve their retirement, it’s not too late a new generation of young adults who can start saving now.
“Even if you contribute small amounts now, the dollars will grow,” said Vickie Bajtelsmit, professor of finance and real estate at Colorado State University. “It gets you in the habit of not having that money to spend and it’s really important for long-term savings.”
But a growing number of minority and low-wage earners in Larimer County face numerous challenges on the road toward a comfortable retirement.
SENIORS STRAIN SOCIAL SAFETY NETS
As a young mother fleeing an abusive marriage, Gonzalez gave little thought to retirement. Working three jobs provided enough money to put food on the table and keep a roof over her family, but left little to set aside for her own future.
She never considered not working until her mid-50s, when a series of health problems including a stroke left her disabled. Today, she lives with her little dog, Pancho, on $903 a month in Social Security disability payments.
Getting by “is not easy, let me tell you,” she said. Portraits of Christ interspersed with family photos on the walls of Gonzalez’s small, tidy living room help her keep a positive attitude. Without God, she said, “I would have given up a long time ago.”
Her situation is not uncommon among Fort Collins seniors who spent decades scraping by on low-wage or low-skill jobs only to be plunged deeper into poverty in retirement.
While Social Security was designed as a safety net to supplement other retirement assets, 21 percent of married couples in the U.S. and about 43 percent of unmarried people rely on it for 90 percent of more of their retirement income, according to the Social Security Administration.
In the absence of other assets, seniors often must continue working or face crippling poverty over a retirement that could last 20 or 30 years. About 20 percent of retirees are now working, either through choice or necessity, according to data from the U.S. Bureau of Labor Statistics.
“White-collar folks aren’t ready to retire at 62 or 65,” said CSU regional economist Martin Shields. “Blue-collar workers have had their bodies beat to hell and they’re ready to be done,” he said. “Unfortunately, they might be the ones who can least afford to retire.”
After a life spent working to sustain her family, Gonzalez found herself in that situation. Unable to work, Gonzalez relies on Fort Collins’ Housing Catalyst for rent assistance and the Food Bank for Larimer County for when the money runs out before the bills stop coming.
“I make sure all my bills are paid before I buy food,” Gonzalez said. “If there’s nothing left, there is always the food bank.”
As the national dialogue focuses on savings of the average retiree, Bajtelsmit said some special groups are in really bad shape: The disabled, widows and divorcees who have not remarried and the long-term unemployed.
“Those groups are not going to be able to retire comfortably,” she said. “We have safety nets, but those are groups that won’t qualify for much Social Security and may not qualify for any. From a societal standpoint, how will be manage helping those people?”
Those who can save adequately for retirement during their working years are more likely to be self-sufficient when they retire, according to the Bell Policy Center. They will need less help from family and social programs and be better positioned to pass assets along to the next generation. Those who are not able to save adequately are more likely to live in poverty and need help making ends meet.
Younger workers will be less able to save for their own futures as more of their resources are needed to help support their parents and grandparents.
ADDRESSING EDUCATIONAL GAPS A KEY SOLUTION
People of color are especially vulnerable to economic hardship and reliance on public assistance in old age, according to a 2013 report from the National Institute on Retirement Security.
Hispanics face unique financial challenges in retirement because of lower education and skill levels and language barriers among immigrants, according to a national report from the Urban Institute, a Washington, D.C.-based think tank that researches economic and health care policy.
While this story is about retirement, preparation for the latter chapters of our lives starts the moment we enter school. A good education can lead to better, higher-paying jobs which provide increased access to wealth, including home ownership and retirement plans.
“We know education pays off,” said John Feeley, spokesman for Front Range Community College, which, like Colorado State University, has a program for first-generation college students.
Among older Hispanics, 45 percent never finished high school compared to 27 percent of blacks and 11 percent of whites, according to the Urban Institute.
That’s why Irish Elementary School in Fort Collins has a robust outreach program between teachers and its predominantly Hispanic families to ensure students get a solid education and can begin breaking the cycle of poverty.
“We try to educate families as much as we can and connect them to different programs and activities in the community that will give them that knowledge of how to have a better life,” said Ana Ordonez-Velasco, family liaison at Irish.
“I am 100 percent sure that all our families who have moved here from other countries, their goal is to have their kids succeed — especially in education. That’s why they made the change in their lives.”
Elva Ramos, 59, tells her granddaughter, Daisy, nearly daily to study hard and stay in school so she can achieve her dreams. While Daisy is only 6, she wants to be a doctor, or maybe a ballerina, Ramos said.
Whatever Daisy wants to do, “education means a lot,” said Ramos, who dropped out of school after her sophomore year. Daisy’s mother never finished high school, either.
Now, Ramos wants to ensure Daisy faces an easier future. “She’s such a smart little kid,” Ramos said. “I hope she grows up to be what she wants. I will do my best to help her meet her goals.”
Daisy has “really opened up” since she started attending Irish Elementary when she was 3, her grandmother said. “I keep talking to her about not leaving school, ever. As Daisy grows up, friends at school may tell her differently, Ramos said. “But I tell her, don’t listen. Always study. If anyone tells you otherwise, talk to us or talk to the teacher.”
Ramos suffered a stroke in 2009 and is on full disability, living on just more than $700 each month. She recently moved from Fort Collins to Greeley where housing is less expensive.
She never made a lot of money when she was working, between $400 and $500 a week, but regrets not putting anything aside for the future.
“I never thought about retirement, I never heard my parents talk about it and I was never educated about it,” Ramos said. “Now, I think ‘Wow,’ I could have had money saved from a long time ago but I don’t. Now I can’t because I barely make it on what they give me.”
She’s teaching Daisy to save her money. “It doesn’t matter if it’s $10 in savings. It will add up, but she needs to always put money in there and not touch it.”
LOW-INCOME WORKERS LACK ACCESS TO RETIREMENT
Saving enough to retire comfortably requires not only planning, but access to and participation in employer-sponsored or individual retirement accounts.
However, nearly half of all private-sector workers in Colorado work for employers that do not offer pensions or 401(k) savings plans. That leaves 753,972 Coloradans without access to the easiest and best way to save for retirement and begin accumulating wealth, according to the Bell Policy Center.
Lack of access to retirement savings plans means a “significant portion of Colorado’s private-sector workers will be almost totally dependent on income from Social Security in retirement,” the center said in a study on retirement in Colorado. “Yet Social Security is only intended to replace about 40 percent of a worker’s income.”
White workers in Colorado are 30 percent more likely to work for an employer that offers a workplace retirement plan than minority workers and are 40 percent more likely to participate in a plan when offered, the study said.
“A lot of different groups have various problems saving for retirement,” said Bajtelsmit, the CSU finance professor. “The group that doesn’t have problems saving are generally white-collar workers with access to employer-provided retirement plans and higher incomes.”
On the opposite side are hourly workers and those with below-average incomes, more often women and minorities working at places that don’t offer retirement plans or employer contributions, Bajtelsmit said.
“It’s pretty difficult for a lot of households to find that money to contribute,” she said. “They have to make a conscious decision to forgo something else and sometimes it’s not possible.”
Higher income earners aren’t necessarily better savers, “but there is a statistical link in that people who are in good shape financially typically have a better education,” Bajtelsmit said. A college education typically leads to higher income and more wealth over a lifetime.
But education is only one piece of a complex retirement puzzle that may include unexpected expenses, as Doris Hine discovered.
The 78-year old former CSU professor had a comfortable retirement in front of her until her husband, George, was diagnosed with Alzheimer’s disease.
His illness cost Hine her house, her retirement, her savings and family inheritance.
In some ways, it cost Hine her life.
When George was diagnosed, Medicaid required the couple to spend almost everything they had on George’s care before the federal program would pay for a nursing home, where he lived for 10 years before his death.
Her one big regret in life: “That I didn’t divorce my husband when he was diagnosed to protect my assets. I just couldn’t do it,” she said, her shoulders slumping, her eyes filling with tears.
Today, Hine lives in a basement apartment with her disabled 55-year-old son, Blair, his 10-year-old springer spaniel Hannah, and her small framing business, Myriad.
She lives on $1,320 in Social Security, spending $950 of it on rent. Blair gets about $700 in disability, some of which pays for a few groceries, a cellphone and cable, she said. Framing sometimes brings in another $100 a month.
Hine’s 1997 Mercury Mountaineer broke down four months ago and there’s no money to get it fixed, so she walks the couple blocks to Beavers Market to get all the groceries Blair can carry a couple times a week.
She counts her money down to the last penny.
“It took a while to figure it out, but I learned what I needed to do and stuck to it,” she said. “I go without, I wear beat-up shoes and my underwear is falling apart.”
She skimps on medicine when needed. When she does buy clothes it’s from ARC thrift store.
Still, she says she’s luckier than many. “I feel like a millionaire when I talk to some folks like homeless veterans and the disabled,” she said. “I just make do with what I have and go with the flow.”