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Retirement And The Race Gap

3 Minute Read

Looking at your retirement and the race gap can bring any number of feelings about the whole system. But taking control of your retirement can give you more control.

Key Points
  • Retirement is not divided by class but there are discrepencies

Retirement Planning In America

Most Americans rely on their employer to plan their retirements, which is not such a strange thing, when you really consider it. Devoting a certain length of time to a company prompted them to, in turn, provide a way to support you, as you supported the company. Or that was the idea, anyway. It was possible to receive a pension and plan your retirement out to a reasonable degree.

As pensions faded from companies, 401(k) plans developed, wherein a corporation contracts with a financial institution to invest funds to the hopeful benefit of all. A corporate 401(k) plan invests combined funds into traditional investments such as stocks and bonds.

If you are a solo entrepreneur you can start a Solo 401(k) and plan your own retirement, closing the retirement and the race gap. A Solo 401(k) plan is a 401(k) qualified retirement plan that was designed for self-employed individuals and small business owners with no full-time employees, excluding a business partner and spouse. Much like the traditional 401(k), this unique plan encourages individuals to save for retirement in a tax-advantaged environment. When participants contribute funds into the Solo 401(k), taxes on the funds will be deferred until the participant takes a qualified distribution.

The Solo 401(k) is an IRS-approved plan that has the same rules and requirements as a traditional employer-sponsored 401(k). However, the Solo 401(k) allows participants to make annual contributions to the plan as both an employee and employer, which ultimately increases the yearly maximum contribution limit.

Retirement And The Race Gap

Recently investments such as the Gamestop and AMC rush has made companies like Robin Hood come under intense scrutiny. Beyond regulation questions, there are concerns that in attempting to “democratize” investing comes with no real support and no concern for the fact that Robin Hood has no protections for the investors it draws in.

Congresswomen are leading the charge to hold Robin Hood and other apps of this type accountable over when they allow and then don’t allow trades to occur. Calling for information similar to what is provided by traditional investment locations to their investors from Robin Hood type sites.

And the concern that these sort of sites treat BIPOC people preys on low-income people more than something named for a ‘champion of the people’ like Robin Hood could be expected to. Most traders on Robin Hood and other site of that ilk may be long-term traders, and no doubt many are. But there are inherent concerns with the stock market and day traders and the sort of volatility created with the Gamestop trade situation.

The Good News

Retirement inequities exist of course, and there is evidence that BIPOC are paid less than their white counterparts on the whole. But anyone can utilize the American retirement system to their advantage. The retirement and race gap can be closed when anyone begins investing early, and continues consistently over the working life of an individual.

With compound interest and regular payments, money accumulates relatively quickly in a 401(k) or Solo 401(k) account. As mentioned, with a Solo 401(k) you can direct your own investments but they are not for everyone. There is an IRA or Self-Directed IRA option available as well, and this also allows for individuals to make money utilizing knowledge they already have, in areas such as real estate and cryptocurrency, which are other democratizing possibilities for investments.

Taking control of retirement may seem far away but it is important, and getting into the habit early of making regular payments and wise, patient choices, can set you up for future successes. Having a retirement fund as an emergency backup can also be a benefit that can be used in dire situations. Learning about your retirement options can help you make the best decisions for your future.

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