Vestwell’s mission is to democratize access to saving programs for all Americans and to close the savings gap. Importantly, we recognize that this mission is a vision of a more equitable future—one where all people, regardless of their background, have access to the saving opportunities needed to build wealth and retire comfortably.
Unfortunately, there is still much progress to be made: the retirement gap between Black and White Americans is still with us today. In 2016, the typical Black household approaching retirement had 46% of the retirement wealth of the typical White household. As a result, the poverty rate in 2019 among Black retirees sat at 18%, while the poverty rate for White retirees came in at 6.8%. Additionally, according to Lori Lucas, CFA & President of the Employee Benefit Research Institute, “Black and Hispanic Americans earning less than $35,000 per year are more likely to have less than $1,000 saved than white Americans.”
In collaboration with state governments and the small business community, our industry has the opportunity to address this disparity and tackle the savings gap head-on. By working together, we can help create a prosperous environment, where every member of society is a full participant in the economy and has the savings to match.
We believe working with small businesses is essential to closing the racial retirement gap. According to Vestwell partner Gusto, just 22% of small and medium-sized businesses offer retirement benefits, compared to 65% for larger organizations. Additionally, many industries that have a high mix of small businesses are disproportionately likely to employ people of color. Some examples include restaurants and other food services (48.9% employees of color), home healthcare services (55%), and child daycare services (43.1%).
As a result, simply expanding access to reliable saving plans can considerably narrow the gap we see today. According to a 2022 report from T. Rowe Price, “participation gaps narrow in cases where plans are offered. When plans are made available, Black workers sign up at a rate of 81.6%, with Hispanics at 82.2%, and White workers at 90.4%.” While expanding access to plans alone cannot close the gap entirely, Vestwell is committed to doing everything we can to ensure these gains are not left on the table—that the hard work of expanding access is actually accomplished, rather than merely proposed.
As we have written before, state programs and their associated mandates are another essential ingredient for closing the racial retirement gap.
State retirement mandates, by nature of being universal programs, expand savings opportunities to people at all levels of society. According to a report published by UW-Madison's Center for Financial Security, the OregonSaves program's largest impacts were among women and non-white savers. In particular, savers of color saw their IRA participation increase by 7 percentage points or 52%. These numbers represent the massive potential state action can have on expanding access to saving programs.
Beyond the direct impact of states offering a retirement option, these programs also encourage private-sector participation in retirement plans. By setting a “floor” for the retirement options employees have access to, state programs encourage employers to implement their own, more competitive retirement plans. Paired with the generous tax credits included in the SECURE 2.0 legislation, government action in partnership with industry leadership has led us to take important steps toward closing the savings gap.
At Vestwell, we are committed to the creation of an inclusive work environment not just because our values demand it, but because we understand a team is most effective when all of its members are equally valued. Companies that fail to empower their employees of color risk blinding themselves to the novel opportunities that arise when every member of an organization has fully bought into the mission. In many ways, we see a commitment to diversity, equity, and inclusion as necessary to closing the savings gap.
In an effort to create an inclusive environment, we have instituted a number of programs that embrace the virtues of equity and inclusion in our workplace. Just some of these are:
Employee Resource Groups ensure our team members have access to the support, professional development, and networks required to thrive in one’s career. For this reason, we are proud to host the Black Empowerment Network within our team. Dedicated to empowering Black employees at Vestwell, this group fosters community by supporting career growth, financial education, and wealth building, while also focusing on philanthropy and networking. With the support of leadership, the Black Empowerment Network strives to create a positive impact for Black employees at our company.
We also recognize that partnerships with other organizations dedicated to diversity, equity, and inclusion can help further these values at our own organization. As a result, Vestwell partnered with OfColor—a Black-owned financial wellness startup on a mission to improve the financial lives of employees of color—to host events throughout February to celebrate Black History Month. These events included a reading group, a fireside chat, a keynote speaker presentation, and weekly support for Black-owned restaurants in New York City.
Our company is dedicated to embodying the #onevestwell spirit. To meet the expectations of this spirit, it is essential that everyone on the Vestwell team feel respected, included, and inspired. Our comprehensive Diversity in the Workplace and Managing Unconscious Biases (DEIB) strategy ensures we hire from all walks of life and has helped us build a team of truly unique team players. We also use the Insights Discovery tool to encourage team members to communicate more effectively and embrace each other’s differences.
Though Vestwell will not be able to close the racial savings gap alone, we have resolved to lead the charge. That means supporting our team members of color with the networks, professional development, and executive buy-in every employee deserves. Together, we will fundamentally change the retirement landscape and build the more equitable future that all desire.