Resource Category: Retirement and Savings

In Wealth Inequality by Age in the Post-Pandemic Era, they find that wealth grew most rapidly for 18-39 year-olds, driven mostly by appreciation of individual business assets. Though these equities are more volatile, the authors suggest that individuals further from retirement may be more likely to invest in them due to the potential for increased returns. Still, they are not able to definitively say why this shift towards equities occurred. Older age groups, by contrast, held larger shares in mutual funds, which tended to be more stable over this period.

Understanding change in wealth by race and ethnicity is more complicated, as the authors find that while net worth for all racial groups (in Racial and Ethnic Wealth Inequality in the Post-Pandemic Era), grew in the first year of the pandemic, this growth quickly slowed for Black individuals by late 2022, and has since reversed itself and fallen below 2019 levels of wealth by the end of the first half of 2023. These data stand in contrast to findings presented by the Survey of Consumer Finances (SCF), which suggest that net worth grew for all groups over a similar period. However, the latest SCF data was collected from March through December of 2022, which may have masked more rapid shifts evidenced in these datasets. Indeed, the inclusion of wealth data from the first half of 2023 is a new addition to our understanding of wealth not available in the SCF.

‘Read More’ link directs you to “Part 1: Racial and Ethnic Wealth Inequality in the Post-Pandemic Era”

The authors find that high-earning workers are three times as likely as low-earning workers to have access to an employer-sponsored retirement plan. These disparities also play out along racial lines, with Black and Hispanic workers less likely than white workers to participate in an employer retirement plan.

Another important finding is that older Black workers are actually more likely than others to participate in traditional defined benefit retirement plans. These higher-quality plans are more common in unionized public sector jobs, and this is one area of the economy where Black workers are a bit more represented in proportion to the overall population. Public sector union jobs have provided a rare opportunity for Black workers to enter the middle class and enjoy some baseline retirement security.

The authors also identify common barriers to full inclusion, including a lack of trust in financial institutions, language barriers, and a lack of familiarity with financial products. This research demonstrates that well-designed CSA programs can be one tool for encouraging children to develop financial literacy and start planning for their futures, but as designed this research does not provide evidence that these programs have any measurable long-term wealth building benefits.