It is hard to save enough when you do not earn enough to save. Nothing could be further from the truth for a statement such as this than it is for African Americans. While African-American buying power has indeed crossed the threshold of $1.1 trillion, as of 2015, with more blacks earning college degrees than commonly believed, and more black households reporting an income of $75,000 or more, there are still negative impacts of the recession ringing true for African Americans when it comes to savings, be it personal, for retirement, or just in terms of net worth.

To start with, numerous statistics have found that the average median household income for African Americans is about twenty percent less than the median household income held by the general population. A study released in 2013 by Prudential also found that this group tended to save less than other groups. Prudential found in their study that the median household savings for African Americans was equivalent to $40,000, which does include retirement savings as well. However, it is far lower in comparison to the average median household savings for the general population, which Prudential found to be $97,000.

It was found that forty-five percent of all adult-aged African Americans participated in an employer-sponsored retirement plan. This is only six percent lower than the fifty-one percent rate of the general population. But why is this?

One reason studies point to as to why African Americans tend to save less despite their household income rising is family responsibilities. A staggering forty percent of black households are headed by single women – women with no partner or spouse. This is much higher than the twenty-six percent rate of female-only heads of household for the general population. Beyond this immediate obligation, Prudential found that thirty-three percent of black households financially support children and or grandchildren who are younger than eighteen years old. It is worth noting that nine percent of this group’s home are supporting parents or grandparents. When it comes to the general population, studies find that only twenty-five percent support children, while four percent support parents or grandparents.

Debt has a major impact on savings, of course. Here, African Americans are disadvantaged as well. In 2013, this group was found to have a median household debt of $18,000, which does not include mortgages. However, this is roughly fifty percent higher than the general population. It is also worth noting that African Americans are also affected more deeply by retirement, considering the group, on average, retires at fifty-six years old. This is three years younger than the general population.

Since the recession, wealth inequality has widened along the racial and ethnic lines. In 2013, the median wealth of black households was found to be thirteen times smaller than that of white households. This is even greater than the rate in 2010, which is where whites had eight times the wealth as black households. When looking at the Hispanic demographic, white households were found to be more than ten times as much in 2013. However, in 2010, the difference between whites and Hispanics was nine times a difference.

It is interesting to know that the current difference between blacks and whites is at the highest level it has been since 1989. In 1989, whites were found to have a household wealth that was seventeen times that of black households. With regards to the difference between whites and Hispanics now, the current level has not been seen since 2001.

It is worth noting, however, that since the “Great Recession” stability in household wealth across the board has declined. Between 2007 and 2010, the average net worth of families in the United States decreased by almost forty percent. Contributing factors to this can be seen as tightening credit, a declining real estate market, and less confidence in the stock market. Federal Reserve date finds, however, that the median wealth for white households increased by 2.4 percent between 2010 and 2013, which is starkly different when compared to the experiences of black and Hispanic household during the recovery period of the recession.

The Federal Reserve finds that between 2010 and 2013, the median income for minority households fell by nine percent. This is far, far less than the decrease of one percent for white households. In a nutshell, this makes it evident that minority households would have had quite the same opportunity to replenish savings as white households, and these groups had to use their savings for a longer period of time than whites.

There is good news in all this smoke, however. Many blacks have been found to feel that they are better off now than they were just a few years ago, and certainly many feel they are better off than their parents. There are many factors in the savings rate for African Americans and other groups which are very deep and complex, such as home equity, stock market investments, and retirement savings plan. Nonetheless, African Americans continue to be at a disadvantage, but through the power of education and buying property can make the necessary moves to close these gaps.

Eric Lawrence Frazier, MBA

President and CEO