Financial Confidence Is Up for Women of Color, but Retirement Readiness Still Lags
What You Need to Know
A new study from Edelman Financial Engines examines the financial outlook of working women of color, who represent an important and growing segment of the workforce.
According to a variety of measures, these workers are growing more financially confident and are prepared to take risk to achieve long-term money outcomes.
When it comes to retirement preparedness and access to advice, however, some findings are more concerning.
Women of color working in the United States report feeling more optimistic about their abilities to earn and save, according to a new report published this week by Edelman Financial Engines, and their perceived preparedness for retirement is evolving as well.
As explored in the paper, “Women of Color and Wealth: Striving to Create a New Financial Future,” survey data suggests many women of color in the United States are committed to writing their own financial narratives to create better outcomes for themselves and their families — despite the persistence of unjust wage gaps and other hurdles.
According to the study, approximately two out of three women of color report “actively forging a more secure path” and striving to avoid financial mistakes they witnessed growing up.
In a press release accompanying the new report, Rose Niang, director of financial planning at Edelman Financial Engines, points to the broad financial disparities women have traditionally encountered, noting how those of color have faced additional obstacles, including larger wage gaps and a lack of tailored financial literacy resources.
“Despite these hurdles, our study reinforced a number of areas where progress is being made specifically with developing greater financial confidence and a positive economic outlook,” Niang says.
When it comes to retirement preparedness, the findings are more concerning. According to the analysis, one of the biggest confidence gaps between men and women is feeling certain about how much money is needed to retire. Men of all races are significantly more confident than women of all races that they know approximately how much money they will need to retire.
Meanwhile, women of color are the least likely of all gender, race, and ethnic groups to have a short-term financial goal of funding retirement savings. Despite this fact, compared to their white counterparts, more women of color feel confident in their ability to meet long-term financial goals, and they are also more likely to approach investing with a risk-taking mindset.
Significant Financial Headwinds
As explained in the report, women of all races face a wage gap when compared with white, non-Hispanic men, but that gap is even more significant for women of color. Specifically, Black women in the U.S. are paid 36% less than white men and 12% less than white women on average.
Latinas in the U.S. are paid 46% less than white men and 26% less than white women, while an Asian American woman who works full time is paid 85 cents for every dollar paid to a white, non-Hispanic man. Native American women, for their part, are at the median paid 60 cents for every dollar paid to white, non-Hispanic men at the median.
In the face of this wage gap and the commensurate uneven distribution of household wealth, women of color broadly report taking pains to actively create new financial futures for themselves and their families. For example, the survey shows 67% of women of color are “forging a financial path that is different from the one they saw growing up.”