The Retirement Race Gap Is Real & It's Affecting Millions. Here's What You Should Know

%POST_TITLE% Thumbnail

The income gap between white and minority populations has long been observed - and it carries into retirement. In 2016, 48 percent of the white population was at-risk in retirement. This number rises to 54 percent for black populations, and 61 percent for Hispanics.1 

Despite the growing fight against racial injustice, minorities are still significantly farther behind when it comes to financial security for retirement: a product of various economic inequalities minorities face throughout their lifetimes. 

Why Is There a Retirement Race Gap? 

It’s important to acknowledge that retirement savings are a direct result of your life earnings, particularly your fiscal ability to save for retirement. There’s a significant racial wealth gap; white people comprise 60 percent of the American population, but they own 86 percent of the wealth.2

Historical Roots 

The Civil Rights Movement occurred less than a century ago. A century before that marked the emancipation of slaves in America. Since then, and long before, the fight for racial equality has been ongoing. 

In the 1900s and onward, it was a battle to offer minorities access to the same privileges that white people had. For instance, throughout the 1900s, black physicians struggled to gain the same respect as their white counterparts, who dominated the medical school and hospital systems.3 And minority adolescents did not have comparable opportunities for higher education until later in the century. 

Occupational Racism

Many systemic issues have been unraveled in efforts to ensure equal opportunity and equal treatment, but racial discrepancies in the workplace continue to pervade. White workers are paid more than black and Hispanic workers with the same level of education, an income gap that’s only exacerbated by gender.4 

This struggle results in lifetime earnings for minorities that are exponentially less than that of the white population. Lower earnings and more barriers - this all translates to a lesser ability to save for retirement, a lower amount of money saved and therefore a higher probability of poverty at retirement age. 

Generational Wealth 

Wealth begets wealth; that is, wealthy parents have the ability to pass wealth on to their children. Over many generations, this accumulates a generational wealth and establishes wealthy families. Most notably, wealthy families tend to flock to the same areas, whereas poorer families will live in poorer communities. 

Although families of color now have more opportunities to accumulate wealth, and many are wealthy, this is still overshadowed by white families that have held wealth for generations. 

What Can Be Done? 

So, the retirement race gap places significant financial burdens on families of color. What, realistically, can be done to close the gap? Traces of institutionalized and systemic racism won’t disappear, but certain policies can be implemented to aid the cause. 

Social Security 

Preserving and increasing Social Security benefits for low-income individuals is an effective strategy in leveling the retirement gap. It’s also vital to account for the gaps in life expectancy between white and minority populations when establishing the retirement age and age-specific filing benefits. 

Baby Bonds 

“Baby bonds” are an idea designed to increase access to wealth accumulation from birth. These bonds include an initial $1,000-$3,000 stimulus for every child, which is built upon based on family income until they become an adult.5 Although not yet a policy, some politicians support such a program for the future.

There are many other ways to fight the gap and systemic racism, such as increasing support for minority-owned businesses or encouraging minority homeownership. Nonetheless, defeating the retirement race gap will be a process. Doing so requires us to recognize and actively fight persisting racial inequalities in America. 


This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.