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Nov. 29, 2021, 12:42 p.m. EST

How to close the racial wealth divide

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By Kerry Hannon

Rodney Brooks has spent most of his life as a financial journalist but offering informal advice to his African-American friends and colleagues has been a big part of who he is as a person.

And his support has been a game-changer for those lucky to cross paths with him. That’s particularly true of those he helped sign up for their employer retirement plans.

His excellent new book, “ Fixing the Racial Wealth Gap: Racism and Discrimination ” is a keystone for his mission to create financial literacy and security for Black Americans and build generational wealth.

Read: 75% of Americans think the government should help them save for retirement

The gravity of the wealth inequality in America is one I would guess few are keenly aware of. I wasn’t, and I write about personal finance and money.

For example, as I mentioned in a recent column about women and retirement security, Black women are especially susceptible to health and wealth issues impacting their retirement outlooks.   Many have spent their careers in low-wage jobs, “and they are also likely to outlive their partners and are more likely to grow old alone and in poverty,” Brooks writes.

Read: Here are the best ways to close the racial retirement gap

Brooks notes that Black women in the U.S. who work full-time are typically paid just 63 cents for every dollar paid to white men. Black workers, and Black women in particular, are less likely to work for employers that offer retirement benefits.

It is a crisis.

The facts are a wake-up call now

This is the backdrop Brooks unpacks in the book:

The net worth of the average white family is $171,000, nearly 10 times greater than that of a Black family’s $17,150, according to a Brookings Institution report. And though Black Americans make up 13% of the nation’s population, their share of the nation’s wealth is only 2.5%, said William Darity, professor of public policy at Duke University.

Home ownership is the chief source of wealth for many Americans, but only 43% of Black people own homes, compared with 72% of white people.

Just 34% of African-Americans participate in retirement savings plans, while 60% of whites do, according to the Federal Reserve.

Only 33% of Black households owned stocks in 2019, while nearly 61% of white households did. Less than half of people of color who responded to an Allianz Life survey said they own investments and other accounts that can help with retirement security, including life insurance, individual retirement accounts, and annuities.

And retired Black Americans depend heavily on Social Security. According to the U.S. Social Security Administration, about 38% of minority beneficiaries rely on Social Security for 90% or more of their income, compared with 28% percent of White people.

Meantime, Social Security benefits can be lower for African-Americans because benefits are based on income and Black workers have historically earned less.

A report from the Federal Reserve Bank in Minneapolis said that there has been zero progress in closing the wealth gap for the last 70 years, Brooks writes. A report by Prosperity Now and the Institute of Policy Studies says the net worth of Black Americans would be zero by 2053 if current trends continue.

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