Studies show that there is a wealth gap between Black and white Americans, and that gap continues into retirement, putting the quality of later life at risk for people of color. To combat this, taking advantage of dedicated retirement accounts and shoring up financial education is critical, Thasunda Brown Duckett, president and CEO of financial services organization TIAA, said in a recent interview with CNBC.
According to the U.S. Federal Reserve’s Survey on Consumer Finances, 57% of white families maintained retirement account savings, while only 35% of Black families and 26% of Hispanic families did the same. At $168,000, the average retirement account balances are also higher for white families, while Black and Hispanic families had average balances of $38,300 and $27,300, respectively.
“All Americans run the risk of running out of money, and as you look at minorities or women, that number is even more pronounced,” Duckett said during CNBC’s Equity and Opportunity summit.
One method that can be used to level the playing field is greater participation in retirement plans and accounts, Duckett said. Statistics show that 64% of Hispanic workers, 53% of Black workers and 45% of Asian-American workers have no access to a workplace retirement plan, according to data from AARP.
“[All employers must provide retirement plan access so workers are] taking the necessary steps to have a secure retirement, while managing the high-stress environment we are dealing with today,” Duckett said.
If a person is in business for themselves, an Individual Retirement Account (IRA) is essential to broaden participation in retirement planning, according to Duckett.
“We have to make sure that everyone is participating,” she said.
Financial literacy — which can be expanded through education — is also essential for closing these gaps, and should be available in the workplace to keep employees active and understanding of retirement dynamics.
“It’s not enough to just have [financial education in schools]; it is our responsibility to make sure that our employees are engaging with the information in a way that they are taking action,” she said.