Only Half of Black and Brown Americans Have Retirement Accounts: How To Prepare For Retirement
Retirement is a luxury. For many Black and Brown people, the concept of retirement is a mere fantasy. While 76% of whites and 71% of Asian Americans have retirement accounts, only half of Black (49%) and Hispanic (52%) Americans do.
I will not attempt to address the many injustices that have led to the racial wealth gap in the United States. But it is important to acknowledge these injustices. If you feel overwhelmed managing your retirement benefits at your job, if you avoid looking at your finances, or if the idea of investing seems terrifying and boring—please know that, to some extent, this is intentional and systemic.
Investing is the cheat code to a different reality, so let’s dive in.
In this post, we’ll explore the history of retirement, how to prepare for retirement, how to set financial boundaries with family, and how the FIRE movement can help you retire early. Because what is better than retiring at 67? Retiring on your own terms.
Where Did Retirement Come From?
Retirement, as we know it, started with German politician Otto von Bismarck in 1889. His idea? If people were too old to work, the government should take care of them. He conveniently set the retirement age to 70, back when the average person barely lived that long. This means retirees were only to collect benefits . . . briefly.
The plan was two-fold: to support older citizens and create job opportunities for younger workers. Other countries loved the concept and copied it, eventually settling on retirement ages around 65 or 70. And just like that, retirement became “a thing.”
Fast forward to today, and the math is . . . not mathing. In the United States, the Social Security program debuted in 1935. The age of retirement was initially set to 65 and was later raised to 67. Since then life expectancy has increased by 17 years meaning we will have longer retirements, pensions are disappearing, and Social Security benefits aren’t enough to fully support retirees.
How to Prepare For Retirement
Calculate Your Retirement Number
Your retirement number is the total value of assets (investments) you would need to live off passive income. The Trinity Study, points to the 4% rule, which provides the formula below:
Annual Expenses x 25 = Retirement Number
For example, if your living expenses are $5,000 per month, your annual expenses are $60,000 and your retirement number is $60,000 times 25, or $1.5 million. This does not mean you need to save $1.5 million—you need to invest a fraction of this and let compound interest do the rest!
This does not mean you need to save $1.5 million in cash—you need to invest consistently and allow compound interest to grow your wealth over time.
Once you have your retirement number, it’s time to build a strategy to reach it.
Take Control of Your Debt
Managing debt is a critical part of retirement planning. You need a plan to pay off debt while avoiding high-interest liabilities like credit cards.
Here are two common methods for tackling debt:
Snowball method where you make minimum payments on all your outstanding accounts, then pay any extra money towards paying down the smallest debt first and work your way up, regardless of the interest rate. This builds momentum and motivation.
Avalanche method where you make minimum payments on all your outstanding accounts, then paying any extra money toward the debt with the highest interest rate. This is a good method when you have debts with different interest rates. Tackling those accounts with high interest rates (such as credit cards) first can save you lots of money!
Start Investing Into Tax-Advantaged Retirement Accounts
The easiest way to start investing is through a 401(k) retirement account. Many of you may already be investing through employer sponsored accounts without even knowing it.
Ask your Human Resource team about your 401(k) options and start contributing a percentage of your checks. This is especially important if your job offers a 401(k) match. This means that your employer will match your 401(k) contributions up to a certain dollar amount.
This is free money—at a minimum, contribute enough to get the full match.
Increase Your Income and Invest The Difference
One of the things that drives me crazy is that personal finance spaces encourage women to be frugal to achieve our financial goals. But you can’t coupon your way to wealth.
Instead, focus on increasing your income through:
Promotions
New job opportunities
Side hustles
Business ventures
When your income increases, avoid lifestyle creep. Instead of upgrading your lifestyle, invest the difference to accelerate your path to financial independence.
Regardless of your current income, you can start now. Consistency and time are your greatest assets.
Setting Boundaries: Children Are Not Retirement Funds
Millennials are often part of the “sandwich generation,” caring for both children and aging parents. This creates difficult financial decisions:
Should you invest for your child’s education?
Support your parents?
Or prioritize your own retirement?
The answer is personal—but your retirement must be part of the plan.
In the Latino community there is an unspoken duty that children are to provide for their aging parents as a way to repay them for “their sacrifices.” I find this sentiment to be a beautiful one. I love being a part of a people who values community. But here is the reality: having children (in most cases) is a choice, and not a sacrifice.
We are not required to provide for our parents. And even if you really want to retire your parents, you may not be able to do so. The same may be true with your children. Even if you would love to cover their educational expenses, doing so may derail your retirement plans which will in turn force your children to have to provide for you in retirement.
Setting boundaries can mean:
Being honest about what you can afford
Communicating expectations early
Prioritizing your long-term financial stability
Many Hispanic (37%) and Black Americans (28%) who have not yet retired are unsure of how much they’ve saved, underscoring the lack of financial literacy in our communities. A non-financial way to help our parents and elders is to help them understand their options and help them prepare for whatever life stage they are in.
How Do You Compare?
For many Women of Color, retirement is not an option at any age. Many of us have seen our grandmothers, aunts, and mothers work well into old age. But this does not have to be your story. With the right tools and strategy, you can build wealth and rewrite the legacies we want to leave for our families.
Here are the numbers:
Roughly 30% of White and Asian Americans have saved at least $250,000 for retirement, compared to only 17% of Hispanic and 16% of Black Americans
44% of Americans have less than $50,000 saved
Only 19% have at least $500,000
15% have no investable assets at all
As a result, many Black and Brown Americans expect to rely on continued work during retirement.
Let’s Talk About the FIRE Movement (Financial Independence, Retire Early)
Who wants to wait until 67 to retire? Not me—and probably not you either.
The FIRE movement (Financial Independence, Retire Early) encourages people to save and invest aggressively so they can retire in their 30s or 40s.
Traditional FIRE suggests saving 50–75% of your income, but that may not be realistic for everyone.
Here are more flexible alternatives:
Slow FIRE: A balanced approach that allows you to enjoy life now while still investing for the future
Coast FI / Barista FIRE: “Retire” from full-time work while maintaining part-time income for flexibility and benefits
There is no one-size-fits-all approach. Your financial independence journey should reflect your values and lifestyle.
You Can Retire on Your Terms
Are you ready to build your version of financial independence?
Start by:
Defining your retirement goals
Creating a plan
Staying consistent—even when it’s hard
If you miss a month, don’t quit—reset and keep going.
Retirement is not just for the wealthy—it’s for the prepared.
To learn the basics of personal finance and investing, check out our first post and start changing your financial future today.
Wishing you all wealth!
