Minding the Gap: Personal Wealth

These realities occur at the individual and systemic level. On the individual level, Ruthie Liberman spoke about how experiencing constant financial stress or trauma can complicate one’s use and deployment of executive functioning, inhibit their decision-making, and influence one's education, career, and financial choices. On the systemic level, Dr. Thea James explained that one’s income, background, and neighborhood directly affect access to health care institutions and services that can accurately diagnose and treat the causes and effects of ailments. At the household level, Sara Chaganti noted how a household’s access to intergenerational wealth can give families the ability to live in neighborhoods with better schools, limit a person’s need for student loans, and provide a person with access to down payments or funds in an emergency. “I think when you compound that with some of what we've heard from Dr. James and from Ruthie… then you start to see how paths can diverge.”

Kim Olson added that these inequities can be further compounded as families with extra resources can begin saving earlier and at a higher rate, which in itself builds more resources. “It's just a completely different mechanism for wealth building when people already have money to begin with,” she said. “It just perpetuates this problem because as soon as people get access, they start to save.”

Olson previewed upcoming research that underscored how this reality can affect other dimensions of one’s life. For example, in the area of care, half of Black workers and 41% of Hispanic workers noted that providing unpaid caregiving to family members created financial hardships for them, compared to just 30% of White respondents.

She also laid out how a lack of wealth and financial savings can impact individuals later in life: While lack of funds for retirement is a universal problem (the median amount workers have saved for retirement is $35,000), the forthcoming paper notes that while 58% of white workers have a 401(k) or other retirement savings plan, just 41% of Black workers and 31% of Hispanic workers do.

So what can turn the tide? Ruthie Liberman suggested that interventions to help individuals and families thrive must be intersectional. She walked through EMPath’s powerful Economic Mobility Bridge program, which works along five essential pillars to help families achieve economic self-sufficiency and long-term success. Finances are just one dimension. The five pillars touch on multiple aspects of personal and family wealth: family stability, well-being, financial management, education and training, and employment and career.

For workers, Olson mentioned the role public or private automatic savings programs can play in helping workers have access to savings. In the health care industry, Dr. James noted that health care services have been more effective when combined with financial coaching and other tools that help ensure individuals and families have access to economic stability, security, and mobility. The panelists also shared several other opportunities like baby bonds, housing incentives, and flexible funding for wealth-building, like those to help households open and expand their businesses.

However, much more needs to be done to even understand the full ramifications of gaps in personal wealth. For example, there’s a need for stronger data that uncovers the prevalence and impact of a lack of personal wealth on underreported racial and ethnic communities, such as Native and AAPI households. The Boston Fed and several partners (including the Boston Foundation) are undertaking a long-awaited update to the Fed’s well-known 2015 “Color of Money” report that will help to address this issue. The new survey expands the study's data collection to include more racial and ethnic groups and translates the survey into six different languages. Outreach and data collection for that report will happen next year, with the report due out in 2026.