According to a recent study by 2053, the median income of Blacks will be $0 (ZERO) – the Black middle class will disappear. This joint study by Prosperity Now and the Institute for Policy Studies details how the wealth gap has increased over the years and the institutions that allow it to increase.
The first distinction this study makes is the difference between income inequality and wealth inequality.
While income inequality is a more pronounced issue, the true culprit of the woes of black people is wealth inequality. The study found that the advantage whites have had over the years are due to:
- Wealth transfer and the advantage of wealth;
- Real estate and the mortgage interest deduction;
- Capital gains tax rate v. ordinary income; and
- Government practices that have led to wealth inequality.
A Brandies University study last year determined that the real reason whites are richer than blacks is because they pass wealth down from one generation to the next. Some of the notable statistics the study found were:
- Whites have enjoyed a long history of public policies that have favored them – GI bill; housing banking, education, etc.;
- White adults who attended college have 7.2 times more wealth than the median Black adult who attended college;
- White SINGLE parent homes have 2.2 times more wealth than the median Black TWO-parent household;
- White households that include a full-time worker has 7.6 times more wealth than the median Black household with a full-time worker; and
- The average white household spends 1.3 times more than the average Black household of the same income group. As a matter of fact, Whites spend twice as much on entertainment and more on cars. The only category where Blacks spent more were utilities, such as electricity, heating fuel. Water, sewer and telephone services – which could be tied to required security deposits and additional payments for customers with lower credit scores.
This study dispels a lot of myths about the personal behaviors are Blacks. In fact, it shows that personal behavior has nothing to do with accumulating and having access to wealth.
Blacks earn more money today than any other time in history; Blacks own more wealth today than any other time in history. But we don’t pass it down and each generation has to start from scratch.
In this episode, I discuss the importance of estate planning and how we can use that in our community to bridge the gap. I discuss:
- the landscape of estate planning (the compounded effects of whites passing wealth down from generation to generation);
- The nitty gritty of estate planning (what’s a will, what’s a revocable trust?); and
- action steps you can take today to make sure you’re well on your way to building a legacy (and not just hustling).
If you want more details about the action steps you can take to start building your legacy plan today, then check out this FREE workbook and pre-recorded webinar.
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