A recent report commissioned by the public policy think tank Third Way says America’s retirement system is failing workers. The 2022 report, found that only half of American workers have a retirement plan available at their current employer.
The study also found that retirement program access gaps increase wealth disparities between high-income and low-income families, as well as among people of different races and education levels. Inequitable access to retirement programs perpetuate systemic racial, educational and wealth disparities in the U.S.
Prior studies have also examined the root causes of racial disparities in retirement savings. Researchers Dania Francis and Christian Weller found that the median retirement for white households was $67,000, which is almost three times the median retirement of Black households in the U.S. Key contributors to this disparity are:
- Systemic legal, social and economic discrimination have limited previous Black and Latino families from garnering wealth that could be passed on to future generations
- People of color have less access to retirement savings accounts through their employers than white workers, which in turn limits the amount of savings families of color garner throughout their careers
Another report also found that the median Black college graduate accrues roughly the same amount of retirement savings over their lifetime as the median white high school graduate. However, while the median white household with a college degree will garner $88,200 in retirement wealth, the median Latino household with a college degree will gain $52,300 and the median Black household with a college degree will have just $20,800.
“This means the average value add for when someone in a white household is awarded a bachelor’s degree is over four times the gain in retirement wealth than if that same bachelor’s degree was awarded to a Black householder,” wrote the authors of the report. The study highlights the need to fix our retirement system in order to end racial disparities in wealth and protect the rights of the elderly.
Robert F. Smith’s Initiatives to Mitigate Inequality
Robert F. Smith, the Founder, Chairman and CEO of Vista Equity Partners, is steadfaslty committed to initiatives aimed at ending racial inequity. Smith is widely known for his $34 million donation to Morehouse College, which covered the student loan debt of the 2019 graduating class.
Smith also advocates for relieving student debt through Student Freedom Initiative, which seeks to liberate students of color by increasing their social and economic mobility through career and financial support. Student Freedom Initiative services include student loan support, tutoring and mentorship and paid internships, among other resources. Student Freedom Initiative was initially funded by an individual donation of $50 million from Smith, as well as a $50 million contribution from Fund II Foundation, a charitable organization advancing change of which Smith is founding director and President.
“You think about these students graduating and then plowing so much of their wealth opportunity into supporting this student debt, that’s a travesty in and of itself,” Smith told TIME when Student Freedom Initiative launched in 2020. “[Student Freedom Initiative is] an opportunity to do something now that matters now, with the potential to transform both these institutions and generations of young African American men and women.”
