Inclusion and equal treatment are top of mind for many Americans, as a quick scan of recent headlines will corroborate. Employers and financial services providers are in a position to help underrepresented communities stand on equal ground when it comes to one particularly consequential activity: saving for retirement.
Empower Retirement conducted a survey in conjunction with the Harris Poll of 2,014 U.S. citizens in an effort to better understand the mindsets of traditionally underrepresented groups and the impact these mindsets have on retirement saving. For the purposes of this article, traditionally underrepresented groups include Black, Hispanic, Asian, First-generation American, Second-generation American, multicultural household, multilingual household, interracial couple and female employees. All the data in this article is from this survey.
The survey revealed that many employees experience a sense of disconnection from the retirement and financial services industries. In fact, 72% of all respondents agreed with the statement that “retirement savings planning is not created equal for everyone.” In addition, 51% agreed that “retirement savings planning is a black box to me — that is, I don’t know what to do or how to do it,” and this is true for 60% of Hispanic men and women, 60% of Black men, and 61% of multicultural households, to call out a few. And these perceived inequalities are also realized inequalities when it comes to retirement savings. While the majority of Americans are saving for retirement, traditionally underrepresented groups lag their peers and women lag men across all groups.
Nearly 90% of all respondents surveyed with a workplace retirement plan have started saving for retirement, but what is more revealing is the percentage of respondents without a workplace retirement plan who have started saving. For example, 36% of men and 36% of white employees who do not have access to a plan have started saving for retirement compared to only 17% of Black employees. Add this to the fact that traditionally underrepresented groups do not have access to workplace retirement plans at the same rate, and it all adds up to less retirement savings. In addition, traditionally underrepresented employees tend to lag their counterparts when it comes to their income levels. It stands to reason that this disparity may impact the ability of lower-income employees to save for retirement.
The reality is that traditionally underrepresented employees may end up saving less and retiring later. But we can help change this. Here are some simple steps to get started.
- Keep it short, sweet and simple. Reinforce that relevant retirement communications are always straightforward, accessible and easy to understand.
- Lead the way. Provide unbiased advice, direction and support — and continue to promote the financial services currently available to participants. You may even consider adding a qualified default investment alternative (QDIA) in the form of a managed account.
- Go digital. Connect savers to the online tools, calculators and features that can help them reach their unique long-term goals.
- Stay proactive. Identify recordkeepers that champion diversity, equity and belonging at every level, especially when it comes to their workforce, value system and internal training.
Read more research like this by visiting the Empower Institute website.
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