Since the rise of 401(k)s in the early 1980s, the retirement gap between black and white workers has widened. Before 401(k)s took off, black and white workers had similar rates of participation in retirement plans. In 1983, 53 percent of white workers and 52 percent of black workers age 32-61 (the age range during which most workers would be expected to save for retirement before becoming eligible for reduced Social Security benefits) participated in an employer-based plan.

However, as private-sector employers largely replaced defined-benefit pensions with defined-contribution plans, black workers fell behind their white counterparts. By 2014, only 47 percent of black workers had a retirement plan at work, versus 53 percent of their white counterparts. Black workers are both less likely to be offered a retirement plan and to opt into a voluntary plan—though whether or not they are offered a plan in the first place is the larger factor.

The gap in retirement savings is even larger than the gap in retirement plan participation. In 2013, white families between the ages of 32 and 61 had nearly five times as much wealth in retirement accounts as their black counterparts—or nearly $100,000 more in retirement savings.

401(k)s and IRAs do not necessarily encourage people to save more for retirement. Instead, they mostly provide wealthy families with tax shelters for existing savings. Since white families have far more wealth than black families on average, they benefit more from these tax benefits, exacerbating racial disparities in retirement and overall racial-wealth inequality.

EPI will release an updated version of the Retirement Inequality Chartbook in early March 2016, showing that most Americans—not just African Americans—have been poorly served by the shift from pensions to 401(k)s and rely more than ever on Social Security.