Vanguard recently released a very interesting study titled, “Diversity and Defined Contributions plans: Loans and hardship withdrawals” which looked at the loan rates according to ethnicity across 7 defined contributions plans.  The sample size was almost 250,000 and was made up of active participants.  I don’t remember my 401(k) asking me my race/ethnicity, but apparently these plans did.

Even if you don’t read the entire study the Executive Summary Provides some interesting Statistics,

Early access. In our sample, 17% of active participants accessed plan savings through either loans or hardship withdrawals in the 12-month
period ended June 30, 2010. Twelve percent of active participants took one or more loans, 4% took one or more hardship withdrawals,
and 1% took both.

Loans. Blacks in our sample were 55% more likely to take a loan than whites or Asians during the 12-month period ended June 30, 2010. Hispanics were about one-third more likely to take a loan. However, black and Hispanic participants borrowed only a slightly higher fraction of their retirement account balance, and there was no meaningful difference in 12-month loan default rates among groups. This higher incidence of loans among blacks and Hispanics occurs after controlling for income, account balance, and other demographic differences.


Hardship withdrawals. Approximately 5% of the participants we studied took hardship withdrawals. Within this group, blacks were almost twice as likely to take a withdrawal as whites. However, they withdrew a smaller fraction of their account balance. Hispanics were about one-third more likely to take hardships as whites, and withdrew a similar fraction of their account balance as whites.

This leads to two questions for me:

  • Do Blacks and Hispanics care less about retirement because of financial education or culture?


  • Do blacks and Hispanics have access to less traditional means of credit?

I believe its probably a mixture of both…but who cares what I think – what do you think it is? Why do Hispanics and Blacks have more qualified retirement loans?