By Rodney Brooks
Sam Kearse, a 70-year-old Black retiree in Hartford, Conn., is a former entrepreneur who has been on disability since an accident 15 years ago. He receives about $2,000 a month in disability benefits. He uses it to pay for food, rent, and auto insurance on a 16-year-old car and utilities.
“I’m struggling,” Kearse said.
Kearse is a prime example of the racial wealth gap in America, which is having a staggering impact on the retirement readiness of African-Americans.
Although Black people make up 13% of the U.S. population, they only have 2.5% of the nation’s wealth, said William Darity, professor of public policy at Duke University and co-author of “From Here to Equality: Reparations for Black Americans in the Twenty-First Century.”
According to the Brookings Institution, the net worth of a typical white family ($171,000) is roughly 10 times greater than for a Black family ($17,150).
The nation’s racial wealth gap is evident in numerous ways:
Laurel Williams, a 64-year-old Queens, N.Y. Realtor and real-estate investor, owns her home, but has no pension, no 401(k) and no retirement account of any kind. Her Social Security will be virtually nothing — “probably $500 a month,” Williams said.
She wishes she had done a better job planning for retirement and building her own wealth.
“Wisdom is something we acquire as we get older,” she said. “If I had only known about things that transpired, I would have done a lot of things differently.”
Williams accumulated retirement savings while working for 13 years at the FDIC (the federal agency insuring bank deposits), but after quitting, ended up spending the money.
“Statistics show the challenges people of color are experiencing when it comes to wealth,” said Rene Nourse, founder of Urban Wealth Management in El Segundo, Calif. and vice-chair of the Association of African-American Financial Advisors. “We are using all of our money to maintain life. Some of us don’t have extra money to build up worth.”
Cecilia Stanton Adams, Allianz’s chief diversity and inclusion officer, said: “Everyone is struggling to be ready for retirement. But we do see people of color in particular — there is definitely a gap.”
Nourse says Black women are especially hurt by the wealth inequities.
“Many times, we have to put a profession on hold when we start a family,” she said. “We’re raising kids and tend to be responsible for taking care of our elders. And because of income inequality, we are not making enough money to focus on our future.”
The pandemic has only made many Black Americans more strapped.
An August 2020 survey from the Prosperity Now research and low-income Americans advocacy nonprofit found that 35% of Black people say their household’s financial situation is now worse due to COVID-19 .
And the nonprofit Financial Health Network consultancy’s August 2020 U.S. Financial Health Pulse survey showed that only 15% of Black adults were financial healthy vs. 39% of white adults .
A significant factor in the retirement readiness of many older Black Americans may be a lack of professional advice and knowledge about personal finances.
“Growing up, that’s not something we talked about at the kitchen table,” said Dawn Kelly, a former executive at Prudential who now owns the Nourish Spot, a Queens, N.Y. health store and juice bar. “I’m not sure my mother or my father had anybody like that. They had a doctor and a lawyer, but not anyone in financial services.”
According to the CFP Board, there were only 1,355 Black Certified Financial Planners in 2019, up 8% from 2018. D.A. Abrams, managing director of the CFP Board’s Center for Financial Planning, said while Black people and Latino people represent about 30% of the U.S. population, they make up only 3.8% of CFPs.
Williams has never sought the advice of a financial planner, something she regrets. “It would be nice to have some type of savings plan,” she said. “I have insurance policies. I’m worth more dead than I am alive.” And, she added, “Whatever God chooses for me is what he chooses.”
Kelly had a 401(k) from her 16 years at Prudential but spent it down for living expenses and her business’ startup expenses after her unexpected, involuntary separation from the company.
“Honestly, my retirement plan is my business,” said Kelly.
What could be done to help close America’s racial wealth gap? Experts offer these suggestions: