Closing Racial & Ethnic Savings Gaps in 401(K)'s
Black & Latino 401K savings rates are lower compared to their white counterparts according to recent research from T. Rowe Price. The median deferral rates were 5% and 8% for Black and Latino participants, respectively, compared to 9% for white participants. Additionally, Black & Latino respondents were more likely to cite having student loan, medical and other types of debts.
So what is an employer to do to close this gap? One of the first steps is to seek input from minority employees to improve any financial wellness program that may be in place. What issues are they facing? What challenges does the group have? How would they like to receive advice?
Once an employer knows the answers to these questions, the next step is to get creative. Designing a financial wellness program is all about measuring the results of the program and determine where there may be gaps. Auto-features can be helpful but raising employee contributions while student loans might be priority number one must be evaluated. It is more art than science but asking the questions is always step one.