Racial wealth gap widens as many workers of color lack retirement savings

Last updated: June 6, 2026

By Kevin Hardy | Stateline

The racial wealth gap is widening as many workers of color go without retirement savings.

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.

Much of that disparity is caused by white families saving more for retirement than members of other racial and ethnic groups, Pew said. Retirement savings, not home equity, is  the largest driver of American household wealth, according to the U.S. Census Bureau.

To help close the racial wealth gap and ensure more people save for retirement, Pew has been advocating for the creation of state and city-sponsored automatic retirement programs to help cover the more than 50 million Americans who don’t have retirement plans through work.

Those programs, called automatic Individual Retirement Accounts, or IRAs, have been growing in popularity: More than 1.2 million workers across the 15 states with active programs have collectively saved $3 billion for retirement through state-sponsored plans, according to tracking from the Georgetown University Center for Retirement Initiatives.

Minnesota recently launched its auto-IRA program that aims to cover workers at all employers with five or more employees. Hawaii’s program is set to launch this year, with Washington state starting its plan next year.

Those programs often capture lower-income workers who tend to be Black and Hispanic, said John Scott, director of Pew’s retirement savings project.

“I think these programs are doing what they’re supposed to do, which is really reaching those workers who have their access to retirement benefits cut off just by virtue of where they work,” he said.

Auto-IRA programs require most employers without retirement offerings to set up payroll deductions for their workers, but do not require any employer match. Employees are automatically enrolled, but can choose to opt out, leading to higher participation rates than if workers were required to opt in to save with the plans.

Employees often contribute post-tax earnings to Roth IRAs, which means they can generally withdraw all or part of their contributions (but not investment returns) without penalties or taxes. That allows workers to not only start building retirement accounts, but to save up for unexpected or emergency expenses, Scott said.

That may also help states persuade workers to stay enrolled in automatic retirement plans.

Georgetown’s tracking shows about 35% of California participants opted out of that state program, while more than 37% opted out of the Illinois program.

In addition to a formal survey, Pew hosted an online discussion to ask Black, Hispanic, Asian American/Pacific Islander, and Native American/Indigenous workers about their views on wealth. Many of those workers did not view wealth in terms of the classic definition of assets minus debts. They instead prioritized financial security, which they saw as a more important goal than simply building wealth.

“What came through in these comments was that wealth to them is really security, and security in the sense of I have some certainty in my life about the income that’s coming in and the bills that have to be paid,” Scott said. “And I don’t really have to wonder if I’m going to have enough at the end of the month after paying off everything that I owe.”

While many people argue against allowing any withdrawals from retirement accounts before workers hit retirement age, Scott said more flexible programs such as the state-sponsored auto-IRAs provide workers with more security.

“You have to meet people where they are,” he said. “And the reality is that if we’re going to ask people to save for the long term, we need to help them build that resilience for the short term.”

Stateline reporter Kevin Hardy can be reached at khardy@stateline.org.