Understanding the racial retirement savings gap and what you can do to help close it
It’s important to understand what you can do to help close the retirement savings gap that exists between Black, Indigenous, People of Color (BIPOC) and their white counterparts.
The retirement savings gap that exists between BIPOC and their white counterparts is extremely large. The average retirement savings for BIPOC is several times smaller than that of white families. Similar to the retirement savings gap found between men and women, extensive disparities exist when looking at retirement savings by race.
Why does it exist?
Most people save a portion of their income to fund their retirement. However, because BIPOC may face higher unemployment rates and additional obstacles than their white counterparts, saving for retirement becomes much more challenging and creates a retirement gap.
What can be done about it?
Here are a couple of ways to help prepare for retirement.
Explore all of your retirement savings options
Retirement accounts such as 401ks are one of the most powerful tools to save for retirement because of the high annual contribution limits and potential for matching contributions from your employer. But if your employer doesn’t offer a 401k plan, you have alternative ways to save. Individual retirement accounts (IRAs) are available to anyone with earned income.
Don’t be afraid to seek advice from friends and family. You may also want to meet with a financial professional because they can help review your financial approach to retirement savings.
Consider working longer
Consider working longer than the typical retirement age if you can. This will enable you to accumulate more savings.
Develop a retirement budget
Prior to retiring, it’s important to develop a well-thought-out retirement budget that will last.
Supplement your retirement income
If you’re retired and notice you have a retirement income gap, consider working part time during retirement to generate additional income.