The COVID-19 pandemic has widened existing gaps in retirement readiness of people of color. In her cover story for the latest issue of NAPA Net the Magazine, Judy Ward explores why—and what can be done to help.
Many black and Hispanic families have a starkly different retirement savings reality than white families. Median balances for those who have a defined contribution plan account totaled $30,000 for both black and Hispanic families in 2019, about half the $55,000 median for white families, according to an Employee Benefit Research Institute (EBRI) analysis of data from the Federal Reserve Board’s Survey of Consumer Finances.
Among working family heads, just 48.3% of blacks and only about a third (31.8%) of Hispanics were eligible for a DC plan at their workplace, compared with 59.6% of whites. Participation rates also differ, averaging 70.2% for black family heads and 62.8% for Hispanic family heads, compared with 81% for white family heads.
The savings gap for people of color likely has gotten even worse in the past year, says Chief Diversity and Inclusion Officer Cecilia Stanton Adams of Minneapolis-based Allianz Life Insurance Company of North America. “I think that COVID has played a huge role in making these disparities continue to grow,” she says. And with 2020’s renewed reckoning with civil rights issues, she says, “We’re at a point now where we can’t look back: We can’t say that these things aren’t happening. It’s important that we take steps to act now—we can’t just sit with this for another decade or two.”
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