1. Encourage employers to voluntarily collect and report 401(k) plan data by race and ethnicity. This would enable employers to know and manage where gaps exist. Knowledge is power.
2. Modify loan requirements to decrease the likelihood of default. Extending the amount of time an employee has to pay off a loan after leaving a job may improve overall retirement savings. Other options could include allowing loan repayments after termination or exploring new options for allowing loans to roll over from one employer to another.
3. Mandate financial education at all levels in both private and public schools to boost financial literacy. A national financial literacy curriculum would provide generations of future employees a comprehensive understanding of both the mechanics (and importance) of sound money management, saving, and investing.
4. Design 401(k) plans in a way that benefits a broad employee base. Features like automatic enrollment with high default contribution rates and periodic contribution increases can go a long way, driving participation across demographics.
5. Communicate with and educate employees in a way that helps them make wise choices. Creating user-friendly and easily understood communication enables workers to learn more about how to effectively manage and grow their savings. This communication should include different cultural perspectives.
Leveling the playing field is up to all of us—employees, employers, and government institutions. Fixing these disparities is mission critical for our country. If we don’t tackle the issues, and soon, the notion of a comfortable retirement will be just a dream and never a reality for far too many of us.
Mellody Hobson is president of Ariel Investments L.L.C., a Chicago-based money management firm serving individual and institutional investors. She is also a regular contributor to ABC’s Good Morning America.
This article originally appeared in the October 2009 issue of Black Enterprise magazine.