Mortality differentials, the racial and ethnic retirement wealth gap, and the COVID-19 Pandemic

Abstract

Using the Survey of Consumer Finances, I find that the Black/white gap in standard net worth widened from 1989 to 2019 but narrowed between Hispanics and (non-Hispanic) whites. When the definition of wealth is expanded to incorporate Social Security and defined benefit pension wealth (both the discounted sum of future benefits) to create augmented wealth, the wealth gap is sharply reduced, especially for median wealth. The Black/white and Hispanic/white disparity in Social Security wealth lessened considerably over 1989–2019. In contrast, the Black/white ratio of mean augmented wealth showed no change, though the ratio of median augmented wealth progressed. The Hispanic/white ratio of both mean and median augmented wealth advanced as well. The COVID-19 Pandemic struck in 2020 and hit the minority community much harder than whites in terms of mortality rates. Besides claiming over a million lives overall, it lopped off 4.7 percent of Social Security wealth among whites, 11.5 percent among Blacks, and 13.1 percent among Hispanics. As a result, while mean augmented wealth dipped only 1.2 percent among whites, it fell 6.7 percent among Black households and 7.3 percent among Hispanics. The effect was even stronger on median values – declines of a 2.6, 9.3 and 12.1 percent, respectively.