Benefit Fitness Challenges

05/04/2024

🌟 Gratitude Galore! 🌟 Huge thanks to all who joined our April 2024 challenge, shedding light on racial disparities in retirement saving and raising $62 for The Alpaugh Family Economics Center. Together, we're empowering future generations with economic and financial literacy. Your support fuels real change! 💪📚

04/29/2024

Our challenge is coming to an end and we wanted to wrap up the challenge on a positive note. The pandemic brought a lot of tough challenges for people, affecting their health, social lives, and money. But there were some good things that happened too, especially for American households' finances. Even though things started off rough, the stock market bounced back, the housing market got busier, and people ended up saving more money. These positive changes were even bigger for minority groups. Nearly 70% of Black and Hispanic savers increased their savings during the pandemic.

These financial improvements offer minorities a chance to boost their retirement savings. As stock markets recover and housing values rise, it creates opportunities for minorities to invest and grow their retirement funds. Additionally, increased household savings provide a cushion for minorities to contribute more towards their retirement accounts. Overall, these positive shifts in the financial landscape present minorities with a brighter outlook for securing their financial future in retirement.

04/28/2024

Meschede et. al. (2017) found that White college-educated families build wealth, while Black college-educated families see their wealth decrease. The researchers also looked at how inheritance or big money gifts affect the wealth gap between races. They found that these gifts could reduce the wealth gap by about $40,000, or 20%. Further investigation revealed that White college graduates are much more likely to give or get financial help for education or buying a home, while Black college graduates are more likely to help their parents financially.

Through complex analysis, they found that receiving financial support for education or buying a home boosts a family's wealth, while giving financial help to parents lowers it. This puts Black college-educated families at a disadvantage because they're less likely to receive help and more likely to give it.

Understanding these dynamics is crucial for understanding how they affect saving for retirement. For Black college-educated families, whose wealth tends to decline compared to their White counterparts, these financial disparities can have a significant impact on their ability to save for retirement. When Black families are less likely to receive financial support for education or home purchases and more likely to provide support to their parents, it can mean less money available for retirement savings. This imbalance in financial support contributes to the wealth gap and can make it harder for Black families to build up their retirement savings over time.

Source: Meschede, T., Taylor, J., Mann, A., and Shapiro, T. (2017)

04/27/2024

Debt could be holding back minority participants from saving for retirement. Black and Hispanic participants are more likely to have different types of debt compared to white people. For example, while 23% of white participants had student loans, 36% of Black participants did. The same trend is seen with credit card and medical debt, which are also more common among Black and Hispanic participants. Even though only a small number of minority savers had predatory debt like payday loans, it was still higher than among white and Asian participants. Unfortunately, debt can cause more financial problems than other money issues.

Source: Banerjee, S. (2024)

04/25/2024

As mentioned in a previous post, Banerjee (2024) found a big difference between white people and other minorities, especially Black individuals, when it comes to saving for retirement. While 38% of white participants started saving for retirement before they turned 30, only 18% of Black participants did the same. Also, more minority savers, especially Black individuals, planned to retire earlier than white participants. This means that minorities, like Black and Hispanic individuals, have less time to save and make their money grow before retirement should they choose to start investing later and retire earlier.

04/23/2024

The information from the Survey of Consumer Finances shows that there are big and lasting differences in wealth between white, black, and Hispanic families. For the past 30 years or so, white families have had about five to six times more money than black families, and about four to five times more than Hispanic families. Between 2007 and 2013, these gaps got even bigger, with white families having seven times more wealth than black families, and six times more than Hispanic families. However, from 2013 to 2016, non-white families saw their wealth grow faster, and by 2016, the gap had decreased a bit, but white families still had a lot more money.

In terms of actual money, the differences between racial groups are huge. In 2016, the average wealth for white families was about $904,000, compared to only $140,000 for black families, and $182,000 for Hispanic families. But when we look at the middle value instead of the average, called the median, the differences are even more striking. The median wealth in 2016 was $163,000 for white families, $16,600 for black families, and $21,500 for Hispanic families. This means that even though wealth is lower in the middle, the gap between races is even bigger.

Source: Thompson, J. and Gustavo A.S. (2015).

04/21/2024

Inheritance plays a big role in how much wealth families have, and it's much more common among white families. About 23% of white families have received an inheritance, compared to only 9% of black families and just 5% of Hispanic families. When it comes to the amount of money received, white families tend to get much larger inheritances. On average, white families receive around $246,000, while black families get about $107,000 and Hispanic families receive around $196,000.

Inheritances and other family gifts, like parents helping with college or buying a first home, can give a big boost to a person's income. This extra money can make it easier to save for the future. For example, if you don't have to spend as much of your paycheck on housing or paying off student loans, you might feel more comfortable putting a chunk of your paycheck into retirement savings.

This can make a big difference in building up your nest egg for retirement, especially when it comes to bridging racial wealth gaps. So, getting help from family can really impact how much money you can save for retirement in the long run.

Source: Thompson, J. and Gustavo A.S. (2015); Markowitz, A. (2023

04/19/2024

Differences in homeownership and where people put their money also play a big role in how much they save for retirement. . In 2022, the U.S. Department of the Treasury found that about 75% of White families owned homes. In contrast, only 45% of Black families and 48% of Hispanic families owned homes. For other racial groups, like Asian, Native Hawaiian or Pacific Islander, and American Indian or Alaska Native families, the homeownership rate was around 57%. Owning a home can be a big help for retirement because homeowners can use it to get money when they need it. So, not having a home impacts what assets some families may be able to use to help with retirement funds.

04/18/2024

The Great Recession widened racial disparities in retirement savings, disproportionately affecting Black and Latinx households. During economic downturns like the Great Recession, having money saved up can really help families get through tough times. But not everyone has the same amount of money saved.

During the Great Recession from 2007 to 2010, both white and Black families saw their savings decrease. But even though white families had more money saved overall, both groups lost about the same percentage of their savings during that time.

After the Great Recession, things started to get better for white families. They started earning back some of the money they lost. But for Black families, things got worse. They continued to lose money even after the recession was over. This shows that economic recoveries don't always help everyone equally. In fact, the Great Recession made the gap between white and Black families' savings even bigger.

04/17/2024

As mentioned in our last post, racial pay gaps mean Black and Latinx workers often earn less money over their lives, which makes it harder for them to save for retirement. This not only affects their savings but also reduces the amount they get from Social Security when they retire. Social Security payments are based on how much people earn during their working years. On average, White men get about $16,308 a year from Social Security, and White women get about $12,336. In comparison, Black men get around $13,200, and Black women get about $10,800. For Latinx people, it's even lower, with around $10,800 for men and $8,808 for women. So, because they earn less, Black and Latinx workers often receive lower Social Security payments when they retire. Being aware of these challenges encourages individuals and organizations to advocate for policies that promote equal pay and retirement benefits for everyone.

Source: Wills, S. (2024). Retirement Savings by Race: Wide disparities exist between White and non-White future retirees—a "racial retirement wealth gap".

04/15/2024

04/13/2024

Racial pay gaps contribute to lower lifetime earnings and reduced retirement savings for Black and Latinx workers. Black and Latinx workers tend to earn less money over their lifetime compared to white workers. Lower income makes it harder to save money for retirement. Even when factors like education, age, gender, and where they live are taken into account, white workers still tend to earn more than Black and Latinx workers. So, because they earn less, Black and Latinx workers might not be able to save as much for when they retire.

Source: Wills, S. (2024). Retirement Savings by Race: Wide disparities exist between White and non-White future retirees—a "racial retirement wealth gap".