Helping Black Americans Build Wealth through Retirement Savings | Millennium Trust Company

Helping Black Americans Build Wealth through Retirement Savings

February 26, 2021
By Millennium Trust

Here’s a shocking number: 14%.

It’s no secret that many Americans are woefully unprepared for retirement. Many don’t have retirement accounts, and those who do, often haven’t saved nearly enough to sustain their standard of living in retirement.

When you dig into the data, it becomes clear that the situation is far worse for Black Americans than White Americans. When Social Security retirement benefits are included, the typical Black household has 46 percent of the retirement wealth of the typical White household. Without Social Security, Black households have only 14 percent of the retirement wealth of White households, according to a 2020 report from the Center for Retirement Research at Boston College (CRRBC).

Retirement savings factor into wealth

Wealth disparities between racial groups have been documented in the United States. A Federal Reserve analysis of the 2019 Survey of Consumer Finances (SCF) showed the average net worth of a typical White household was $983,400, while the average net worth of a typical Black household was $142,500.


Mean net worth*

Median net worth*

White families



Black families



Source: Federal Reserve, 2019 Survey of Consumer Finances

*Mean is the average among households in the group. Median is the typical household in each group. Net worth is any assets (house, car, retirement savings, investments, etc.) minus any liabilities (debts, loans, etc.).

Retirement savings are a critical component of wealth, and highly effective components of building retirement savings appear to be automatic enrollment in available retirement savings plans and automatic payroll deduction to contribute to retirement savings plans. These retirement savings plan components may help explain why workplace retirement plans, which allow employees to set aside money from each paycheck into tax-advantaged retirement accounts, have become the primary way Americans save for retirement.

Unfortunately, a significant number of workers, of all races, do not have access to employer-sponsored retirement savings plans. reported,

“The single biggest hurdle for many is access. By most estimates, about half of private-sector workers aren’t offered plans through employers. They tend to be in low-wage jobs, or working for smaller companies uncomfortable with the administrative costs of retirement plans.”

Improving Retirement Plan Access

Prior to the pandemic, many employer-sponsored workplace retirement plans had adopted automatic features, such as automatic enrollment, automatic default contribution increase and automatic IRA rollovers, to help:

  • Boost plan participation
  • Increase participant savings rates
  • Preserve participants’ retirement savings
  • Improve retirement readiness, overall

Measures of retirement readiness, like the National Retirement Risk Index (NRRI), suggest that automating retirement saving helped improve retirement outcomes.

Job losses associated with the pandemic reversed some of those gains. In 2020, pandemic related high levels of unemployment created a circumstance in which 51% of American workers will be unable to sustain current levels of income in retirement, “…even if they work to age 65 and annuitize all their financial assets, including the receipts from a reverse mortgage on their homes.”

Improving retirement plan availability for Black Americans, who often do not have access to workplace retirement plans, can help increase wealth and improve overall retirement security.

Workplace retirement plans chart

Source: Federal Reserve Board, 2019 Survey of Consumer Finances.

Small businesses need retirement plan access

One way to improve retirement savings plan access is by making affordable alternatives to workplace 401(k) plans available to smaller employers. “According to recent government estimates, only about half of workers in companies with fewer than 100 employees are offered a retirement plan,” according to Brookings.

The Millennium Trust Retirement Savings Selector Tool for Small Businesses was built to help smaller business owners learn about the types of plans available – from a low cost SIMPLE or SEP plan to a no-cost payroll deduction IRA solution – and identify the one that fits the needs of their company and employees.

Small business owners were disproportionally hurt by the pandemic. University of California Economics Professor Robert Fairlie reported,

“The number of active business owners in the United States plummeted by 3.3 million or 22% over the crucial 2-month window from February to April 2020. The drop in active business owners was the largest on record, and losses to business activity were felt across nearly all industries. African-American businesses were hit especially hard experiencing a 41% drop in business activity.”

Furthermore, Fairlie states that ”the number of African-American business owners plummeted from 1.1 million in February 2020 to 640,000 in April, 2020, representing 41% of the previous level…. The implications for lost income may have long term negative consequences on savings and wealth.”

Like other small business owners, Black company owners can build wealth and help their employees build wealth through workplace retirement savings solutions. Expensive, administratively-intensive options are not the only choice.

Small business owners can explore the options available and adopt the one that best fits their company’s needs with the help of Millennium Trust’s Retirement Savings Selector Tool for Small Businesses.

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The material in this blog is presented for informational purposes only. Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.

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