3 Simple steps to empower Black employees for retirement
While many Americans are in the same boat when it comes to relying on workplace retirement benefits for our future, some of us face stormier seas. Black History Month was an important reminder that diverse groups face distinct challenges—and the workplace benefits you offer to employees must be able to address and encompass a wide range of needs.
Race shouldn't affect retirement security, but it does. Communities that have experienced chronic financial insecurity have historically had less access to employer-sponsored retirement benefits or sound financial advice, and some of your Black, Indigenous, and People of Color (BIPOC) employees may even be the first generation in their families to receive workplace retirement benefits. So, how is your company positioned to identify and deliver solutions uniquely tailored to uplift these communities?
Context is key
The simple fact is that employees of color are more likely to face an insecure retirement than their White colleagues. BIPOC communities have not historically had equal access to wealth-generating resources like better-paying jobs and higher home values, making it difficult to save for the future—let alone build wealth.
Federal Reserve data on White, Black and Latinx household wealth inequality have remained consistently similar over last 30 years—in other words, the racial wealth gaps have not significantly improved. And the 2020 US Census revealed that Black Americans were twice as likely as non-Hispanic White Americans to be living in poverty, with a median Black household earning just 61% of the median non-Hispanic White household.
In this light, it comes as no surprise that as of 2020, Black Americans held just 14% of the total retirement savings held by White Americans—and without Social Security to depend upon, more than 50% of Black senior citizens would be living in poverty.
It's important to keep this context in mind whenever you turn to your retirement programs. While closing the gap on retirement equality will take a comprehensive effort across public and private domains, there is still a lot that companies can do today to help BIPOC employees take meaningful steps toward a secure future through retirement benefits.
No matter how your company's retirement plan is structured, here are a few simple actions that can help you take meaningful steps to better support employees who may be working from a deficit.
Aligning your company's core DE&I goals with your retirement programs means you'll need to begin with addressing where your employees are today and where they need greater support. So, meet your diverse employees where they are—ERG groups, networking groups, etc.—and talk to them about retirement.
Tailor your surveys to be inclusive, focused on identifying specific needs, and open-ended enough to allow employees to let you know what's really on their minds.
Go the extra step to also tailor educational content to focus on helping BIPOC employees better understand their finances and plan for the future—research shows that Black Americans are behind their White counterparts in financial wellness and personal finance literacy on topics such as savings, investment and debt management, all of which affect the ability to save for retirement.
By the time we're finished with the bills, few of us remember to "pay ourselves" by allocating a part of our paycheck to savings each month. But by automating enrollment in your retirement benefits, you can help employees kickstart a sustainable pace of retirement savings—and ensure no one gets left behind.
Research also shows employees are less likely to "opt out" of a designated contribution once already enrolled, making automatic enrollment a win-win for both your employees and your program participation goals.
3. Match and track
Take the time to track segmented employee participation, then use that data to identify and leverage the most effective reminders or targeted educational opportunities for specific groups. That way, you can track progress and refine your communications strategy to help increase BIPOC employee participation in retirement and other workplace benefits.
More work to be done
While it's important to prioritize DE&I efforts on myriad fronts within your organization, make sure your retirement benefits are a part of the conversation.
Even if your business doesn't currently offer a retirement plan, support your employees with basic education and support around the importance of saving for retirement. Taking actionable steps to educate and empower a diverse workforce to reach their full retirement savings potential can help businesses address the racial retirement wealth gap—while also fostering positive employee engagement and loyalty.
This article was written by BenefitsPRO Editor and C.J. Marwitz from BenefitsPro and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to email@example.com.
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