Retirement savings gap widens racial wealth disparity
A new analysis from The Pew Charitable Trusts finds that the racial wealth gap expanded by about $50,000 between 2019 and 2022, driven largely by differences in retirement savings. The typical white family had $240,000 more wealth than the typical Black family and $223,000 more than the typical Hispanic family in 2022. Retirement savings, not home equity, is the largest driver of American household wealth, according to the U.S. Census Bureau. To address the gap, Pew has advocated for state-sponsored automatic Individual Retirement Account (IRA) programs, which now cover more than 1.2 million workers across 15 states, collectively saving $3 billion. Minnesota recently launched such a program, with Hawaii and Washington state set to begin their plans soon. These auto-IRAs automatically enroll employees, who can opt out, resulting in higher participation rates. In California and Illinois, about 35% and 37% of participants opted out, respectively.
What’s reported
The median wealth gap between Black and Hispanic families and white families expanded by about $50,000 from 2019 to 2022.
In 2022, typical white family had $240,000 more wealth than typical Black family and $223,000 more than typical Hispanic family.
Retirement savings is the largest driver of American household wealth, per the U.S. Census Bureau.
Over 50 million Americans lack retirement plans through work.
More than 1.2 million workers across 15 states with active auto-IRA programs have saved $3 billion.
Auto-IRA programs require most employers without retirement offerings to set up payroll deductions; no employer match is required.
Employees are automatically enrolled but can opt out.
About 35% of California participants and 37% of Illinois participants opted out.
Many workers of color prioritized financial security over the classic definition of wealth (assets minus debts), according to Pew discussion groups.
Open questions
No open questions identified in the source article.
MISCONSECTIONS
No widespread misconceptions addressed in the source article.
Key figures
John Scott, director of Pew’s retirement savings project
Sources: stateline.org
