Plan data analysis can help identify levers for positive change

Understanding what data tells us about wealth gaps across participant demographics can help identify equitable opportunities for positive change. Working with our plan sponsor clients, we can marry employee data with our recordkeeping data and segment it by ethnicity, age, gender, location (rural/urban) and other demographics to get a better picture of employee behaviors and needs. Armed with this information, we can be more prescriptive in developing plan design strategies and programs to engage employees in more meaningful and impactful ways.

Why this matters

When there is a wealth gap, it actually grows over a person’s life. For example, according to the Retirement Research Center of the Defined Contribution Institutional Investment Association (DCIIA), younger African American/Black families with head of household ages 35 to 54 have median household wealth of $40,000 compared to similar age white families with $185,000.1 And as you look ahead, that gap grows. Older African American/Black families with head of household over age 55 have 83% less median household wealth ($54,000) compared to white families ($315,000) of the same age.1

The research also looked at retirement plan contribution rates and pre-retirement withdrawals, which are both factors that can affect retirement savings. Findings showed:

Hispanic women are contributing on average 9.3% less than others in their age cohort.1

African American/Black women are contributing on average 8.2% less than others in their age cohort.1

African American/Black women could have 33% more at retirement if they did not take pre-retirement withdrawals.1

“Looking at retirement specifically, we’ve made a lot of progress as an industry by providing access to workplace retirement plans,” says Kai Walker, head of Inclusion Transformation, Retirement and Personal Wealth Solutions at Bank of America. “But now we must take a magnifying glass and look deeper into how that plan works for employee cohorts across the company. The data can help tell that story and suggest ways we can address disparities.”

Key takeaways

  • Connect with your Bank of America representative to discuss conducting an analysis of your plan to help identify equitable retirement opportunities for employees across demographics.
  • Consider the levers you can pull easily today, such as leveraging employee resource groups as forums to share personal and/or retirement planning stories that can help inspire employees to take positive actions toward their financial goals.
  • If you have automatic solutions, evaluate if it is time to adjust the plan design for optimal effectiveness. If you don’t have automatic solutions, discuss options with your Bank of America representative.
  • Promote access to personalized tools and encourage digital engagement to help improve outcomes. Programs such as Personal Retirement Strategy and Financial Wellness Tracker can help cut through employee inertia and offer actionable steps toward better financial health.

1 Retirement Research Center, DCIIA Organization, Collaborative for Equitable Retirement Savings, 2023.

Personal Retirement Strategy is an online investment advisory program sponsored by Merrill Lynch, Pierce, Fenner & Smith Inc. (“MLPF&S” or “Merrill”) that uses a probabilistic approach to determine the likelihood that participants in the program will accumulate sufficient total assets to achieve their annual retirement income goal. The recommendations provided by Personal Retirement Strategy may include a higher level of investment risk than a participant may be personally comfortable with. Participants are strongly advised to consider their personal goals, overall risk tolerance, and retirement horizon before accepting any recommendations made by Personal Retirement Strategy. Participants should carefully review the explanation of the methodology used, including key assumptions and limitations, as well as a description of services and related fees which is provided in the Personal Retirement Strategy Brochure (ADV Part 2A). It can be obtained through Benefits OnLine® or through the Retirement Benefits Contact Center.

Merrill offers a broad range of brokerage, investment advisory and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select.

IMPORTANT: The projections or other information shown in the Personal Retirement Strategy program regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.