North Carolina Faces Widening Racial Wealth Gap as Retirement Savings Lag
New research reveals the wealth gap between white families and families of color grew by $50,000 in just three years, driven largely by disparities in retirement savings access.
RALEIGH, NORTH CAROLINA — The racial wealth gap in North Carolina and across the United States continues to expand as many workers of color lack access to retirement savings, according to new research highlighting the growing disparity in household wealth.
The median wealth gap between Black and Hispanic families and white families expanded by about $50,000 between 2019 and 2022, according to research from The Pew Charitable Trusts. The typical white family had $240,000 more wealth in 2022 than the typical Black family and $223,000 more than the typical Hispanic family.
Retirement Savings Drive Wealth Disparity
Much of that disparity stems from white families saving more for retirement than members of other racial and ethnic groups, Pew researchers found. Retirement savings, not home equity, represents the largest driver of American household wealth, according to the U.S. Census Bureau.
The findings highlight a significant challenge facing North Carolina and other states as more than 50 million Americans lack retirement plans through their employers, according to AARP research.
State Programs Show Promise
To address the retirement savings crisis and help close the racial wealth gap, The Pew Charitable Trusts has been advocating for state and city-sponsored automatic retirement programs. These initiatives, called automatic Individual Retirement Accounts or IRAs, provide retirement savings options for workers whose employers don’t offer plans.
The programs have gained momentum across the country, with more than 1.2 million workers across 15 states with active programs collectively saving $3 billion for retirement through state-sponsored plans, according to tracking from the Georgetown University Center for Retirement Initiatives.
North Carolina Considers Action
North Carolina lawmakers have proposed their own “work-and-save” retirement program targeting small businesses, though the state has not yet launched an active program. Minnesota recently launched its auto-IRA program that aims to cover workers at all employers with five or more employees.
The automatic enrollment features of these programs are designed to help workers build retirement savings even when their employers don’t provide traditional 401(k) plans. Workers are automatically enrolled in the programs but can opt out if they choose.
The research comes as policymakers nationwide grapple with the long-term implications of inadequate retirement savings, particularly among communities of color who face additional barriers to wealth accumulation.
