Customized Benefits and Financial Wellness Are Key to Closing the Racial Retirement Savings Gap

Retirement is commonly seen as a time of relaxation and fulfillment after years of hard work. However, for many minorities in America, retirement can be more of a daunting and uncertain concept.

According to the National Institute on Retirement Security, “A large majority of Black and Latino working age households – 62 percent and 69 percent, respectively – do not own assets in a retirement account, compared [to] 37 percent of White households.”¹

This stark contrast to the national average highlights the persistent problem of racial disparities in retirement savings. However, it doesn't have to be this way.

With proper financial education and specialized workplace benefits, minorities can bridge the gap and retire on time with confidence. These tools not only address financial wellness but also tackle systemic barriers that hinder wealth accumulation within marginalized communities.

In this article, we'll dive into how customized workplace benefits and financial education are crucial components in closing the racial retirement savings gap and helping minorities retire comfortably on time.

The Importance of Financial Wellness

One of the key drivers behind the racial retirement savings gap is the lack of financial wellness among minorities. According to the TIAA Institute, an average of just 28% of African Americans were able to successfully complete at least half of the Personal Finance Index.²

Without a solid understanding of basic financial concepts such as budgeting, saving, and investing, individuals may struggle to make informed decisions about their finances. This can lead to poor spending habits and inadequate planning for retirement, ultimately resulting in lower savings rates.

For example, many minorities may not be aware that they are eligible for various tax credits and deductions that could help them save money for retirement – even if they have access to a workplace-sponsored retirement plan.

This lack of knowledge highlights how crucial it is for employers to provide educational resources that cater specifically to employees from diverse backgrounds.

Customized Workplace Benefits

Another crucial step in closing the retirement savings gap for minorities is implementing customized workplace benefits. In too many cases, minority workers are left out of traditional employer-sponsored plans or have limited access to them.

For example, minority groups are far less likely to have access to a retirement plan through their workplace – with Latinos being as much as 42% less likely.¹

Fortunately, many companies are starting to recognize the importance of addressing diversity and equity within their workforce and are taking steps toward providing more inclusive workplace benefits. These efforts can help ensure that all employees have access to similar tools and resources when it comes to planning for retirement.

For example, some companies may offer employee match programs where employers contribute a percentage match based on the employee's salary contributions to their retirement plan. This not only serves as a valuable benefit but also incentivizes employees to save more toward their retirement goals.

Additionally, offering flexible work arrangements such as remote work options or job sharing can be especially beneficial for minority workers who may face additional challenges such as caregiving responsibilities or long commutes.

Financial wellness programs that provide tools and resources specifically designed for diverse communities can be also valuable in promoting financial stability and bridging the racial wealth gap.

This communicates to employees that their employers are committed to promoting diversity and addressing systemic barriers that hinder wealth accumulation within marginalized communities.

Empowering Employees Through Financial Education

With customized workplace benefits in place to help bridge the racial retirement savings gap, it is equally essential for employers to offer financial education programs tailored towards minorities.

These programs can include workshops, seminars, and one-on-one counseling sessions that cover topics such as budgeting, saving for retirement, and investing.

Employers can empower their employees to take control of their finances and plan for a secure retirement through comprehensive financial education.

Additionally, these educational resources could also serve as a platform for minority employees to share their experiences with personal finance and learn from one another’s strategies.

Partnering with reputable financial institutions or hiring diverse financial advisors who are dedicated to serving minority communities can provide an added layer of support and trust for employees when seeking guidance on retirement planning.

This creates opportunities for individuals from marginalized backgrounds to receive personalized advice that aligns with their unique needs. Promoting diversity and addressing systemic barriers, in turn, can help lead to a more engaged and satisfied workforce.

How Your Company Can Benefit

Closing the racial retirement savings gap not only benefits individuals but businesses on a macro level. A 2015 study by McKinsey & Company found that companies with diverse workforces are 35% more likely to have financial returns above the national industry median.³

Additionally, offering a retirement plan can benefit your business when tax season rolls around. Employer contributions to retirement plans are tax-deductible, and assets in said plan can grow tax-free.⁴

Empower Your Workforce With Enrich

Financial wellness and customized workplace benefits are crucial components in bridging the racial retirement savings gap. By providing educational resources, employers can empower marginalized employees to take control of their finances and plan for a secure retirement.

The Enrich financial wellness program can help make this vision a reality. With its comprehensive suite of financial education resources, personalized benefits, and expert guidance, Enrich empowers minorities to bridge the retirement savings gap and retire comfortably on time.

Through Enrich's financial education programs, employees will gain essential knowledge and skills to make informed decisions about their money. They will learn about budgeting, saving for retirement, investing, and maximizing tax benefits.

Improving financial wellness among minorities is crucial as it helps them overcome systemic inequalities. Contact Enrich to request a demo today, and learn more about how the Enrich Employee Financial Wellness Solution can help you financially empower your employees.

1 - https://www.nirsonline.org/reports/race-and-retirement-insecurity-in-the-united-states/

2 - https://www.tiaa.org/public/institute/about/news/financial-literacy-wellness-and-resilience-among-african-americans

3 - https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/why-diversity-matters

4 - https://www.irs.gov/retirement-plans/plan-sponsor/benefits-of-setting-up-a-retirement-plan