Damn you white privilege!
Our current retirement system heavily relies on tax-advantaged savings accounts such as 401(k)s. This system works reasonably well in the world of upper-middle-class and affluent people. Unfortunately, that same 401(k) system functions quite poorly for most people outside that top economic layer. African-American and Hispanic workers are particularly unlikely to derive financial advantage from these arrangements. Median financial wealth is quite low for both groups, especially when compared with non-Hispanic whites.
You might think this has a lot to do with access to 401(k)s, but it turns out when the savings accounts are offered to workers at the same company, whites still benefit a lot more than Hispanics and African-Americans. A new working paper by Stanford’s Kai Yuan Kuan, Mark R. Cullen and Sepideh Modrek examined 401(k) participation within a single firm from 2003 to 2010.
Kuan and colleagues find very large disparities in accumulated 401(k) savings. As you can see in this chart above, non-Hispanic white workers accumulated vastly more savings. Disparities would surely be even greater if their analysis included the stock market run-up through 2015.
What’s striking in the paper is the many disparities arise among workers who are already actively contributing to their retirement plans. Kuan and colleagues provided data showing how much workers had accumulated in 2010.