White workers have nearly five times as much wealth in retirement accounts as black workers

[whatthehey]

26. There's a lot going on here, with various drivers

Black workers have overall lower rates of pay than whites, making it harder to save if that pay is on the cusp of livability to begin with (which is not as universal as claimed on DU, but not rare sadly).

However contrary to implications above, 401k access is very widespread, among workers at all levels. To be sure truly small few-person companies don't have one very often, but low pay/skill jobs are no bar. McDonalds for example has a very good 401k benefit, open to all. Overall 80% of FT US workers could have access to retirement savings via employers But far fewer take advantage. Is there a racial difference here? There was a few years ago in 2007, even equalized for income and education. Not sure of changes, but likely still sn issue.

The survey found that the average savings for blacks Americans earning $50,000 or more a year is $48,000, compared with $100,000 for whites with the same incomes and educational backgrounds. And while 76 percent of whites invest in stocks or stock mutual funds, only 57 percent of black investors do.

So here we see, through either financial conservatism or other cultural differences, a significant black/white shift even among the middle class. The same study goes on to show that whites choose a greater number and diversity in funds in which to invest, spreading risk and maximizing gain. Why the difference? Tempting to blame education funding, but tony white schools ignore finacial literacy too usually. Generational examples? 401ks may be a bit new for that to be a big deal specifically, although more inferential examples are plausible. Culktural norms and priorities? Possible, but notoriously hard to quantify.

The lower than optimal use of 401ks is a crying shame with many causes too. Yes some people are on the bleeding edge and cannot spare a pretax dime, but bars and restaurants are full in areas the 1% don't even know exist, cell phones costing as much as I, decidedly upper-middle as I am, put into my 401k every month sell by the millions with new ones every year, and name brand clothing is the norm on streets at any income level. There is some responsibility here, among people of all ethnicities. The difference between buying Nike trainers and generics, or an iPhone 6+ compared to a Huawei ripoff, or a couple fewer beers or shots every trip to the bar, invested pretax with an employer match, using the most basic and broad of very low index funds requiring zero personal finacial acumen, and then left alone (here another of the legendary DU double standards comes in. People who advise investing are routinewy scolded that the average working man is not a financial genius, but then the same scolders proudly assert the sense of trying to be a financial genius and cash out as markets fluctuate. Just leave the fucking money in an index fund and no "bankster" will steal it in down markets!) would build up over a working life to a level far exceeding the current average.

The badmouthing of investing in this and other social media is a great injury to the people who need investments most. From inane prattle about the "rigged casino", which has generated consistent compound growth over any appreciable period for well over a century for investors of all income levels, to lurid claims of funds "stolen" when idiots panic and sell in down markets, to fanciful nonsense about fees taking all the gains, scare those with limited financial acumen from taking free money from their employers and leveraging the advantages of tax deferral.

Again I will post the guaranteed ways to benefit from 401ks and the like. There are 3 rules that a 6th grader could easily follow.

1. Pay in as much as you can afford to, but at least as much as your employer will offer a match for. Not doing the latter is like turning down a freely offered typically 3-6% pay increase.

2. Invest in broad index funds. Your selections will list names and descriptions and performance history. Unless you have a decent grasp of the markets don't try to outguess the overall. Look for things like Russell 2000 index or SP500 index. Put most of your money in them, then spread around the rest. As you get older, move more into bond funds.

3. Leave the fucking thing alone, except for moving slowly more and more into bonds. Never sell or cash out preretirement unless homelessness or starvation or death are the alternatives. Really important here. I would live in my car on Taco Bell before I'd sell my retirement funds. The people who lose are those who sell or stop contributing when the market is down. If you can afford it that's the time to INcrease your contributions, buying more shares with the same $$. If you can't then so be it but never ever ever sell 401ks etc in crashes. If you happened to hit retirement in, say, 2008, then sell as slowly and as little as you can, starting with the bond funds.