How Large are Racial and Gender Disparities in 401(k) Account Balances and What is Causing Them: Initial Findings from the Collaborative for Equitable Retirement Savings

Key Findings:

  1. Account Balance Disparities: The analysis reveals significant race and gender disparities in account balances, persisting even after adjusting for salary and tenure. These differences are attributed to variations in contribution, loan, and preretirement withdrawal behavior.

  2. Income and Tenure Impact: Controlling for income and tenure does not fully explain the observed differences in account balances. Disparities widen for workers closer to retirement, emphasizing the desire for targeted interventions.

  3. Contribution Disparities: Black and Hispanic females contribute lower percentages of their salaries than their counterparts, after controlling for age, salary, tenure and plan design variables, influencing long-term retirement savings outcomes.

  4. Preretirement Withdrawals: Black and Hispanic workers exhibit higher frequencies of preretirement withdrawals as well as a tendency to take larger percentages of their account balance, affecting the overall accumulation of retirement savings.

  5. Loan Usage Disparities: Black participants are more likely to have outstanding loans compared with their white counterparts, contributing to disparities in account balances.

  6. Mitigating Disparities: Simulation results indicate that eliminating preretirement withdrawals would substantially mitigate race and gender disparities, particularly for early- and mid-career 401(k) participants.

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