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Steps employers can take to narrow the racial retirement wealth gap

Blacks and African-Americans are at risk of falling short in retirement, but employers may be able to help

At Voya, we believe all Americans deserve the freedom that comes with a comfortable retirement, however, 54% of African-Americans are at risk of falling short in retirement due to the racial retirement wealth gap.1 The racial retirement wealth gap refers to the economic inequalities faced by African-Americans and other minorities as they plan for retirement. Fortunately, employers play an integral role in helping to close the gap and improve retirement outcomes.

With aspirations to become America’s Retirement Company®, Voya has outlined a few key strategies employers can use to close the gap and help African-American employees best plan for retirement.

Enroll, encourage & engage African-American employees

Employer-sponsored retirement plans are a major source of retirement security and wealth for Americans. While increased plan participation may be a goal for all demographics, it’s especially important for African-Americans. In spite of similar rates of eligibility, an estimated 48% of African-Americans participate in employer-sponsored retirement plans compared to 55% of eligible white employees.2 To help improve plan participation, employers can look to enroll, engage and encourage.

Enroll African-American employees with auto features

Automatic enrollment (auto enroll) allows you to automatically “enroll” all eligible employees in the plan unless they take action to opt out. You can select the default contribution rate as well as the default investment option. By enacting auto enroll for your plan, you can help eligible African-American employees overcome inertia toward a more secure financial future.  

Encourage plan participation with diverse communications

People, in general, are more receptive to information and communications that speak directly to their situation. Tailoring your communications and plan enrollment information by including diverse imagery can help your Black employees see themselves saving and achieving their retirement goals.

Engage Black employees with education

Educating your African-American employees on the importance of participating in the plan can help to minimize the effects of cultural factors that may work against healthy savings habits. Consider hosting webinars or seminars for minority employees to educate them on savings disparities and why it’s important to save for retirement.

Help your African-American employees build financial confidence

According to Voya's Online Consumer Community POC Exploration in November of 2020, many black employees need help building financial confidence, specifically when it comes to:

  • Investment strategies,
  • Ability to save for retirement and
  • Making the right financial decisions.

Although most employees can benefit from professional financial guidance, African-American employees are especially in need. For example, 72% of white employees agree they know where they stand in terms of being financially prepared for retirement, but only 64% of African-Americans share the same sentiment.3  However, offering your employees a managed accounts solution may be key to making a difference.  

Managed accounts are professionally managed investment services that use the core plan investment menu and provide participants with individual investment advice, retirement income planning and payout strategies as well as education and outreach. This type of engagement can be critical for African-American employees to have successful retirement outcomes. And the results of managed accounts are telling: 51% of all managed account members increased their savings after enrolling in the service; while 29% of all managed account members significantly improved their retirement income forecast.4

Help Black employees manage student loan debt

Student loan debt impacts Americans of all ages and races with more than 44 million people owing a collective $1.5 trillion.5 As the second largest debt class behind only home mortgages, student loan debt can prevent employees from participating in an employer’s retirement plan.

While a problem for all Americans, student loan debt has a disproportionate impact on the African-American community.  Black students and employees tend to:

  • Take out student loans at a higher rate: Nearly 85% of black recipients with a Bachelor’s Degree (BA) carry student loan debt; while 69% of white BA recipients have student loan debt.6
  • Borrow higher amounts of student loans: Blacks tend to borrow almost 15% more than the average student.7
  • Pay their student loans back at a slower rate: Almost half of African-American graduates owe more on their undergraduate student loans four years after graduation than they did when they received their degree— compared to 17% of white graduates.8
  • Default more often: Black BA graduates are five times more likely than white BA graduates (21% vs 4%) to default on student loan repayment.9

In the end, student loan debt exacerbates the persistent and growing racial wealth gap. A growing number of employers are starting to offer student loan assistance programs to help employees manage this debt — oftentimes without placing their retirement at risk. This assistance can take on an array of forms, ranging from analysis and guidance to matching contributions. And with the passage of the Consolidated Appropriations Act of 2021, employers may be able to pay tax-free student loan repayments for an employee, up to an annual cap of $5,250 until Jan.1, 2026.

Federal student loan payment suspension: All federally-held student loan payments have been temporarily paused for all borrowers, with payments and interest accrual suspended until at least September 30, 2021.

Financial Wellness

2020 has ushered in a renewed awareness on the racial-financial wealth gap. Although the focus generally shifts to the asset side of the ledger, it’s critical to pay attention to how debt and liabilities play a role. Across the board, all races and ethnicities tend to share a similar amount of debt with 44.5% of white and 47.7% of black households having credit card debt.10

Even so, Blacks tend to have a dramatically lower median debt-to-asset ratio of 29.5%; while white households have a 46.8% median debt-to-asset ratio. One of the causes of this variance is the fact that only 27.7% of black households have housing debt compared to 47.4% of white households.11 Unlike credit card and other types of debt, housing debt translates into home ownership, which is a tangible asset that can help build financial wealth.

This disparity highlights the importance of African-American employees having access to financial wellness and education programs. At Voya, our holistic financial wellness program is a straightforward, integrated experience that helps employee see their complete financial picture as well as their next best step.

Employers can help by offering employees access to a holistic financial wellness program. At Voya we offer a straightforward and integrated financial wellness experience that helps employees see their complete financial picture as well as their next-best step. The Voya Financial Wellness Experience is based on the six areas we believe for foundational to money health and necessary to achieving an on-time retirement.

And, because no two employees are the same, each employee will take a brief assessment that is aligned with the existing pillars. Upon completion, the employee will receive a personalized summary of their results in real time. The easy-to-interpret scoring system makes it easy for each employee to see where they are today and what they can do to improve their financial situation. Learn more about Voya’s holistic Financial Wellness Experience.


At Voya, we are committed to helping all Americans achieve more desirable outcomes. In doing so, it’s important we work to understand African-American retirement aspirations, highlight the disparities and offer tangible solutions to help Black communities overcome obstacles toward a brighter future. For example, we recently formed the Diversity, Equity and Inclusion (DEI) Task Force as an ongoing initiative to increase equity and inclusion while generating innovative ideas. We will continue to build on the impacts of our DEI program by working with external partners and community organizations to combat racism and enhance our efforts to help African-Americans retire better.

Reach out to your Voya Relationship Manager today to learn more.




Neither Voya nor its representatives offer tax or legal advice. Please consult your tax or legal advisor before making a tax-related investment/ insurance decision.

Products and services offered through the Voya® family of companies.

For plan sponsor use only. Not for use with participants.

1. Munnel, Hou, and Sanzenbacher. “Trends in Retirement Security by Race/Ethnicity” Center for Retirement Research at Boston College, 2018
2. Hearts & Wallets IQ Database, 2019, 2020 Tracking Survey.
3. Kantar U.S. Monitor, 2020.
4. Financial Engines Sponsor Provide Report, 2019.
5. SHRM, “Employers Explore Repaying Student Loan Debt,” July 2018.
6. U.S. Dept. of Education, National Postsecondary Student Aid Study 2016.
7. Center for Responsible Lending, The Leadership Conference Education Fund, NAACP, National Urban League, and Unidos US. "Quicks and: Borrowers of Color & the Student Loan Debt Crisis" September 2019
8. Scott-Clayton, Judith & Jing Li. 2016. “Black-white disparity in student loan debt more than triples after graduation.” Brookings Institution. Available at
9. Scott-Clayton, Judith. Brookings Institution "The looming student loan default crisis is worse than we thought," January 2018. Available at
10. Employee Benefit Research Institute. “How Is Debt Different by Race and Ethnicity?” January 2021. Available at
11. Ibid.