Recent research conducted by Economist Impact highlights a significant discrepancy between white and Black workers’ retirement confidence. While half of white respondents feel confident about retiring by the federal retirement age, only 39% of Black survey takers share this sentiment.
Older Black workers (ages 51-64) face even greater uncertainty, as they’re the least likely to participate in their employer-sponsored retirement plan. When they do participate, their portfolio balances are far smaller than similarly aged white workers. According to the Government Accountability Office: “Of those with a retirement account balance, white households had significantly greater median balances than households of all other races each year from 2007 to 2019. For example, in 2019 those white households had median balances of about $164,000, which were about twice that as households of all other races (about $80,300).”
Furthermore, AARP reports that approximately 53% of Black workers lack access to employer-sponsored retirement plans, compared to 42% of white employees. For Latino workers, the percentage of those lacking access is even higher at 64%. Additionally, just over one-third of Black adults reported having a financial advisor, compared to 44% of all Americans. This discrepancy is further compounded by the challenge of finding advisors with a shared cultural background and viewpoint with Black families, given that fewer than 2% of certified financial planners are Black.
To help address racial disparities in retirement readiness, there are several strategies sponsors can implement:
Improve communication. Economist Impact found that poor benefits communication hindered utilization, with minority employees disproportionally reporting difficulty taking full advantage of available benefits.
While these strategies are critical steps toward narrowing the gap, addressing this important and complex issue will require a comprehensive, multi-pronged approach with sustained commitment and collaboration across sectors to create a more equitable and inclusive financial landscape for future generations. This includes expanding access to retirement benefits, investing in community-based financial education initiatives and increasing diversity within the financial services industry. By recognizing the needs and challenges faced by minority workers and implementing inclusive solutions, employers can play a pivotal role in fostering greater financial security and retirement readiness for all employees, regardless of race or ethnicity.
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