Inequalities In Retirement Security: Unique Challenges for African American Households

An interview with J. Michael Collins, Ph.D. and Cliff A. Robb, Ph.D.

By Patrick Ring

Retirement Section News, January 2022


J. Michael Collins, Ph.D., is Fetzer Family chair in Consumer & Personal Finance, and a Professor of Public Affairs at the University of Wisconsin-Madison.

Cliff A. Robb, Ph.D., is the faculty director for the Personal Finance Program, and an Associate Professor of Consumer Science at the University of Wisconsin-Madison.

I recently interviewed Michael Collins, Ph.D. and Cliff Robb, Ph.D., coauthors of the first-place essay in response to a recent call for essays by the SOA Aging and Retirement Strategic Research Program. This program called for essays that explored how differences in wealth and retirement outcomes are experienced by people of different races and ethnicities and to promote a better understanding of the underlying issues surrounding the differences. The winning essay focused on retirement security of Black/African American households. The link to the winning essay is here.

Patrick Ring (PR): Can you tell us a little bit about yourself?

Michael Collins (MC): I am a Professor at the University of Wisconsin-Madison, where I teach and conduct applied research around household finance topics. I came to Wisconsin in 2008 after completing my Ph.D. from Cornell University. Prior to graduate school I worked for about a decade in the public and private sectors. My focus is on economically fragile families and ways that financial services, as well as public policies, can better serve more people in the US.

Cliff Robb (CR): I am an Associate Professor at the University of Wisconsin-Madison, and I also serve as the faculty director for the Personal Finance program. I oversee a program of over 300 undergraduates with aspirations to work in the financial services industry. I have worked at Wisconsin since 2016, and held prior faculty positions at the University of Alabama and Kansas State University. My research focuses on consumer financial well-being, with an emphasis on young adults and their transition to financial independence.

PR: What interested you in this call for essays?

MC: There is a lot of media attention to issues of financial security and retirement, but not many opportunities to cut through the headlines into the evidence about what kinds of issues people are facing. Meanwhile, there are hundreds of researchers releasing academic studies, but rarely do these cross over to be used by practitioners. This forum seemed like a unique opportunity to bridge research to practice

CR: I was excited to see a professional organization that was interested in exploring challenges related to aging and retirement in America. Within our department, we do a lot of research in the space of financial well-being and place an emphasis on financially vulnerable populations. This call for essays felt like a great forum to share some of what we know about challenges faced by households in the United States related to retirement planning and financial decision-making in general.

PR: Did anything surprise you during your research?

MC: The differences between accumulated wealth levels between White people and people of color in the US is so striking—but that obscures the many issues that underlie these differences. Even small issues, like lack of access to information and advice, can accumulate over a life time to exacerbate differences.

CR: A lot of what we cover in the essay is data that I was already pretty familiar with, but I am always struck by the clear disparities in retirement security when we explore households from different racial backgrounds. Access and use of financial planning services has been a longstanding issue, and it is one that I am trying to help with one student at a time.

PR: What are one or two key points you want the reader to take away from your essay?

MC: There is no one solution, but expanding access to financial services, especially through employers, can help reduce the racial wealth gap. Our review also highlights how important programs like Social Security are for people as they age. Hopefully policymakers take note of this as the projections for the Social Security Trust fund predict shortfalls in less than two decades.

CR: Whereas planning for retirement is a challenging issue for a large percentage of Americans, there are clear systemic issues that need to be considered. Access to retirement plans and support during the multiple stages of the process (planning for and transitioning to retirement) is needed for all Americans, but particularly Black/African American and other minority households.

PR: How does the retirement security of Black/African Americans compare with other segments of society?

MC: The general pattern is that Black/African American workers save less over their working years, making them more reliant on Social Security, and more at risk to run short of the income they need to sustain their standard of living in old age. These patterns are improving, but there is still a long way to go.

CR: A larger percentage of Black/African American households display lower levels of retirement security, as detailed in our essay. A larger percentage of Black/African American households are reliant on Social Security in retirement, and we generally see lower incidence and levels of savings for these households. As a result, wealth is typically lower for these households and that is a major concern when it comes to long-term financial security.

PR: What are unique challenges facing the Black/African American community and what are some solutions that will mitigate those challenges?

MC: Workplace-based savings is critical. Small employers, self-employed people and people who change jobs more often all have a hard time building up retirement savings linked to payrolls—which is the main way most of us prepare for retirement. Black/African Americans lack the same level of access to retirement savings as part of their work. Anything that makes access to high quality retirement savings plans will help—from ways to reduce costs for employers, to automating savings into individual retirement accounts that are linked to employment. Expanding financial inclusion for more types of workers and more employers of all sizes is key for more people to save.

CR: As we noted, Black/African Americans are less likely to have access to a structured retirement plan option through their employer. This is a significant issue and is coupled with challenges related to employment stability for this population. Introducing some sort of broader public option that is not tied to specific employers might be a reasonable approach here, but it would certainly need to be well-crafted and considered. We also see lower support for Black/African American households in the form of professional advisor services. This issue likely stems from biases in the current advice market for income cut-offs as well as the fact that diversity within the planning profession is quite limited. The vast majority of financial planners are older, White and male. Rethinking models of financial advice can open the door for a more diverse planner population, and services for individuals at all income levels.

PR: In closing, do you have anything else you would like to share with the reader?

MC: Retirement savings is complex, since it takes place over a lifetime of work, depends on good financial services options and employer supports, and varies so much across types of workers and life experiences. Social Security is one important part of retirement planning, but it was never intended to be the only source of income for people in old age. The more we can create systems that help people to save for retirement at younger ages, the more we will be able to reduce inequalities in financial security for people of color.

CR: An additional challenge of retirement planning, beyond the fact that it can be complex to determine how much one might need, is that you only get one shot at doing it right. It is imperative that we provide adequate supports so more households can attain a comfortable retirement. This entails a number of possible changes to the way we help people think about and prepare for retirement.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.

Patrick Ring, ASA, volunteers as the acting chair of the Retirement Section Council’s Communication Team, which is responsible for publishing Retirement Section News and the Retirement Forum, hosting podcasts, and maintaining the Retirement Section Council’s webpage. He can be contacted at