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Building a Secure Future: Inclusive Solutions for the Racial Retirement Gap

Senior couple paying bills at home

Everyone deserves a chance to retire with dignity and security. However, this promise is out of reach for too many in our nation, especially people of color.

My mother worked as a union factory worker and, in retirement, she received $68 a month from her pension. She was proud of the career she had, but the money wasn’t enough to live on so she moved in with me. Luckily for us, she had that option. Unfortunately, many Black and Brown families have minimal choices when it comes to their retirement years, and many jobs no longer offer pensions or other retirement benefits.

Here at AARP, we recently took a deeper look into factors that reduce financial security and ways to address them in a series called Retiring While Black – Closing the Racial Wealth Gap.

With a record number of people turning 65 this year, and Black adults accounting for more than 14% of all adults, there has never been a more crucial time to focus on closing the wealth gap.

While individual and family circumstances vary greatly, on average, consider the following:

  • According to an AARP Financial Trends Survey, around two-thirds of White adults feel financially secure, compared to fewer than half of Black adults.
  • Median household income in 2020 was roughly $46,000 and $55,500 for Black and Hispanic workers, respectively, compared to $75,000 and $95,000 for white and Asian families. Black adults tend to have more debt, with 78% of older Black adults considering their debt to be a problem compared to 56% of white respondents. Additionally, Black adults have lower rates of homeownership, with only 45% of Black households owning their homes compared to 75% of white households, which is a major vehicle for building savings and wealth.
  • Around 60% of Black working-age households do not have a retirement account, and those that do have a median savings of only $35,000, compared to $80,000 for White households.
  • About 53% of Black workers do not have access to employer-provided retirement plans, compared to 42% of White employees. This disparity also affects Latino workers, with approximately 64% lacking access to retirement accounts through their employer.
  • Black caregivers often have more demanding caregiving situations than their white or Asian counterparts and have less access to benefits and family or paid leave. Black and Hispanic caregivers are more likely to stop working in order to care for loved ones.

People report a range of barriers to saving for retirement, including high housing costs and low wages. Addressing longstanding educational, employment, and economic disparities will require a range of policy and cultural changes, as well as greater access to tools that already exist.

In addition to policy changes, for example, we need more inclusive financial education and outreach, tools and resources, and continued dialogue to help bridge the racial retirement gap and foster more equitable financial security.

While there are a range of experiences within the Black community, it's important to recognize that many Black adults routinely have less access to solid financial planning resources and retirement savings vehicles that make putting money away and saving easier, such as employer-based 401(k)s. Only 36% of Black adults reported having a financial adviser, compared to 47% of their white counterparts, according to a 2023 Allianz Life survey. When Black families seek advisers who understand their backgrounds and perspectives, the search can be discouraging, given that less than 2% of certified financial planners are Black.

AARP has free resources to help point people in the right direction. To empower individuals to make informed decisions about retirement, AARP offers user-friendly tools such as the AARP Retirement Calculator, Social Security Calculator, and an exclusive Interview an Adviser guide. Resources are also available from government agencies, including but not limited to the Department of Labor's Employee Benefits Security Administration and the IRS.

AARP is also advocating for the adoption of a universal automatic IRA. Our research has found that having a retirement savings vehicle is one of the most effective ways to help people who do not have employer-based retirement funds set aside money for the future or emergencies. These programs are currently available 16 states and allow employees to have control over their savings decisions, including whether they want to participate and how much to save.

There are no quick fixes. But there are important ways we can make a difference. Together, we can work towards a future where everyone, regardless of background, can retire with dignity and security.

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