Over fifties in minority ethnic groups twice as likely to be financially insecure

New research published today [5 September] finds a stark contrast between the financial security of people aged 50 plus from a White British background and those from minority ethnic groups. Nearly twice as many older minority ethnic households are in serious financial difficulties (22%) as White British households (12%). For other age groups, there was generally little difference in financial wellbeing by ethnicity - though the researchers did also find that those aged under 30 from minority ethnic backgrounds were significantly less likely to be ‘financially secure’ (10%, compared with 18% of White British householders). This suggests that, despite progress, some ethnic inequalities may be persisting across generations.

The Financial Fairness Tracker, commissioned by the abrdn Financial Fairness Trust and analysed by a team of researchers at the University of Bristol, has been monitoring household finances since the start of the pandemic. Researchers questioned over 5,000 households about their financial situation and have analysed the data according to ethnicity.

It is well-known that minority ethnic groups are more likely to be financially worse off than those from White British backgrounds. However, it is less well-known that age is a significant factor in determining financial wellbeing. Looking at specific indicators, older people from a minority ethnic background were significantly more likely than their White British counterparts to say that they had ‘no savings’ (29% vs. 20%), and that they find meeting bills and credit commitments a ‘constant struggle’ (20% vs. 12%).

It was also found that minority ethnic women over 50 are particularly likely to be financially insecure. 28% of minority ethnic older women in the 50 plus age group are in serious financial difficulties compared with 16% of men.

It is likely that poorer health outcomes and lower savings in pensions are key factors in explaining these differences between minority ethnic households and those from White British backgrounds.

The research also found minority ethnic groups (as a whole) tend to fare worse than White British group across a range of indicators, including:

o They are twice as likely to have faced debt collection activity in the past six months (24% vs 11%, rising to 33% among those from Black, Mixed or Other ethnic groups);

o A greater proportion of people from minority ethnic groups had turned to family and friends for financial help in the past six months (27% vs 17%), had borrowed money for daily living expenses (34% vs 25%) or had faced significant food insecurity (18% vs 11%) than the White British group;

o Two-in-five said that financial worries caused them to sleep poorly at night (43%, vs 32%) and over half reported that thinking about their financial situation made them feel anxious (56% vs 44%).

Mubin Haq, CEO of abrdn Financial Fairness Trust, said:

“Over the last two decades we have seen big improvements in reducing financial hardship for older people, especially pensioners, but financial difficulties are significantly greater for those from minority ethnic backgrounds. They are much more likely to have little in savings and to be behind with bills than White British older people. And this leads to higher levels of financial anxiety and cutting back on everyday essentials. Whilst there are inequalities between ethnic groups, nowhere is this more stark than amongst older people and there is a pressing need to address these racial disparities.”

Professor Sharon Collard, Chair in Personal Finance at the University of Bristol, said:

“It is worrying that the wealth gap seems to widen once people reach their fifties. The fact that older people from minority ethnic groups are struggling more so than their younger peers could relate to working and pensions. Policy makers need to ensure this group does not miss out on pension provision or the social security benefits they are entitled to, including Pension Credit, particularly since the abolition of universal Winter Fuel Payment.”

Read the report