Racial Gaps Persist in Retirement Savings
Racial disparities continue to exist in retirement plan participation and loan usage, shows new findings from Dayforce, a global human resources (HR) software.
Details of its report, “The Retirement Divide,” show that in 2024, 84.6% of white workers participated in an employer or individual retirement plan, compared to 61.1% of Latino workers and 68.2% of Black workers. It noted a steady uptick in participation rates for white workers since 2022 and declines for Black and Latino workers.
Further, 26.4% of Black and Latino participants had an active loan from one of their accounts, compared to 14.9% of white participants, Dayforce reported.
“We believe this research should serve as both a wake-up call and a call to action,” said Jason Rahlan, global head of Sustainability & Impact at Dayforce. “For far too many people, the promise of a secure retirement is drifting further out of reach. Our hope is that these findings will be used to help millions more workers make progress towards the secure retirement they’ve worked hard for and deserve.”
Dayforce’s findings show significant racial disparities in other areas of retirement planning. Total annual retirement contributions for white workers were $11,676, compared to $5,404 for Black workers and $5,389 for Latinos. The overall retirement savings rate for white workers was 10%, while it was 6.8% for Black workers and 7.5% for Latino employees.
Dayforce’s research examined trends with retirement savings, employee and employer contributions, participation, and loan usage for full-time U.S. workers from 2021 to 2024, with the aim to show how participant demographics like gender, race, ethnicity, and age contribute to savings.
Gaps in participation rates for men and women continued to widen as well, Dayforce observed in its report. Close to 80% of men in 2024 said they participate in a retirement account, versus 76% of women. This was a one-point percentage drop since 2021, when 77% of women reported contributing for retirement.
Men also had higher total annual retirement contributions, at $10,974, while women reported contributions of $8,096.
High-income earners forge ahead; low-income workers fall behind
Dayforce’s findings underlined notable disproportions in retirement savings between high- and low-income workers. Participation rates, total contributions, and overall savings rates increased since 2022 for those earning over an annual salary of $150,000, however dropped for those making less than $50,000.
In fact, workers earning $50,000 or less had some of the sharpest drops in savings, Dayforce reported. Participation in employer or individual retirement plans fell from 58% to 52.9%, and overall savings rates dipped from 4.9% to 4.6%.
“The Retirement Divide reveals for the first time the true state of retirement savings in America,” said Matt Bahl, vice president for Workplace Financial Health at the Financial Health Network. “Every American should have the opportunity to retire securely and with dignity, and this report shines a light on the large and growing inequalities that lie at the core of our nation’s retirement insecurity crisis.”
Gen Z participation climbs
On a positive note, Dayforce highlights substantial progress in retirement savings for Gen Z workers.
The research showed that since 2022, participation rates, savings rates, and total contributions for full-time Gen Z workers grew faster than any other age group. Participation for the youngest working age group increased from 64% to 68.7%, while savings rate grew from 6.6% to 7.2%, and total contributions boosted 24%, from $3,985 to $4,958.
Additional findings from Dayforce’s “The Retirement Divide” report can be found here.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
