Opening a Retirement Account Is Not Enough to Close the Black Retirement Divide

Racial economic inequality follows Black Americans across the life course. In 2022, 22 percent of Black children lived in poverty, compared with 10 percent of white children. Among adults ages 18 to 64, the rates were 15 percent for Black adults and nine percent for white adults. Among people age 65 and older, nearly 18 percent of Black adults lived in poverty, more than twice the eight percent rate for older white adults. The retirement divide does not suddenly appear in old age. It reflects disparities that begin in childhood and build over a lifetime.

Retirement is supposed to be the reward for a lifetime of work. You save what you can and eventually step away with enough income and wealth to live with dignity. But for African Americans, that promise was not built on equal ground.

The divide begins with the basic conditions of working life. Compared with other major racial groups, Black workers face higher unemployment, lower wages, and less access to workplace retirement plans. For roughly six decades, the Black unemployment rate has remained about twice that of the white unemployment rate. Every period without work means lost income, missed retirement contributions, and fewer years of investment growth. Lower wages also leave less room to save after paying for basic needs.

Financial shocks deepen these disadvantages. A family may have to reduce retirement contributions, take on debt, or withdraw money already saved. In its 2025 household survey, the Federal Reserve found that 38 percent of Black adults had enough emergency savings to cover three months of expenses, compared with 61 percent of white adults. Among people who had not yet retired, only 23 percent of Black adults said their retirement savings were on track, compared with 43 percent of white adults.

This racial wealth divide also widens with age. The Center for Retirement Research found that the typical white household ages 50 to 64 had six times the nonhousing wealth of a Black household in the same age group. Among households over age 65, the divide grew to nearly 10-to-1, with about $173,000 for white households compared with $18,000 for Black households. Social Security helps counter this inequality. The progressive formula replaces a larger share of earnings for lower-paid workers. For Black beneficiaries age 65 and older, Social Security typically provides at least half, and often most, of household income. But benefits remain tied to lifetime earnings, so lower wages and interrupted careers produce lower monthly payments. Social Security softens racial inequality in retirement, but it does not erase it.

Several new efforts aim to help workers without an employer-sponsored retirement plan to start saving. These policies address a real problem because saving through payroll deduction is easier than opening an account independently.

State-facilitated retirement programs in several states allow workers without an employer plan to save automatically through payroll deductions. Research shows that these programs increase retirement account ownership and assets and can encourage some employers to establish their own plans. The gains are meaningful, but balances may remain modest for workers with low wages, unstable hours, and frequent job changes.

Beginning with the 2027 tax year, the federal Saver’s Match will replace the current Saver’s Credit. It will provide eligible lower- and middle-income workers with a government contribution of up to $1,000 deposited directly into a retirement account. A recent executive order also directs the Treasury Department to establish TrumpIRA.gov by January 1, 2027. If properly implemented, the platform could direct workers toward low-cost private IRAs with basic standards for transparency and investment quality.

Taken together, these policies are likely to increase Black retirement savings. Automatic enrollment makes it easier to start saving. The Saver’s Match adds federal funds to a worker’s contributions. A reliable platform for low-cost IRAs could help workers retain more of their investment returns. But these programs, by themselves, are unlikely to close the Black retirement divide. A worker cannot receive the full match without contributing. Automatic enrollment does not put more money into a paycheck. A low-cost account cannot make up for years of unemployment, low wages, high debt, or the absence of employer contributions. When a household lacks emergency savings, retirement funds may be needed long before retirement.

That is why these programs should not be judged solely by the number of accounts opened. Two questions should guide the evaluation of these programs. First, do they increase Black retirement savings? Second, do they reduce the retirement divide between Black and white households? We should examine whether Black workers remain enrolled, contribute consistently, receive the federal match for which they are eligible, and build balances over time. We should then compare those outcomes with those of white workers to determine whether the gap narrows.

Answering these questions will require effective program design, strong consumer protections, and transparency. Enrollment in these retirement programs and accounts should be simple, fees should remain low, and default investment options should be easy to understand and appropriately diversified. Workers should receive clear information about the Saver’s Match, including eligibility requirements and where the match will be deposited. The government should also collect and publish sufficient information to determine whether these programs are narrowing retirement disparities rather than merely increasing the number of accounts.

Expanding account access must be paired with policies that strengthen the financial foundation Black workers need to save. That means promoting stable employment and adequate wages, expanding employer retirement contributions, helping households build emergency savings and home equity, and protecting a strong Social Security system.

The goal cannot simply be to give every worker a retirement account. It must be to give every worker a fair chance to build enough financial security to retire with dignity. These new programs can increase Black retirement savings, but they will not close a divide created over a lifetime without broader economic policies that strengthen Black households’ ability to save consistently.