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Black Americans are living longer. Generational wealth comes next. Here's why.

Taxes and America's racial wealth gap
How tax laws contribute to America's racial wealth gap 05:57

Half a century ago, the life expectancy of Black Americans was significantly lower than the life expectancy of White Americans — 10 years lower, back in the 1960s and 1970s, for instance. But that life expectancy gap has been whittled down in recent decades to just three years, thanks in large part to greater access to health care for Black people in the U.S. 

Black Americans are now expected to live to age 75, compared to 78.5 for Whites, according to the most recent data from the Federal Reserve Bank of St. Louis. While a longer lifespan — and the unquantifiable benefits of being alive longer — bodes well for Black families in general, it also has profound financial implications, experts said, particularly for Black households trying to build wealth and pass it on to future generations. 

"Health is wealth," said Deborah Owens, a former executive at Fidelity Investments who coaches Black women on how to build wealth. "Living longer is a plus because then we can still allow our assets to grow, instead of just having to depend on them for current income."

More frequent visits to the doctor have translated into fewer Black Americans dying from cancer and heart-related diseases, the Fed researchers found. Fewer Black Americans are dying from homicides, too, researchers said, prompted by a nationwide drop in crime rates over the past century and Black middle-class families moving into safer neighborhoods. 

More time for growth

Living longer means Black Americans can spend more years aggressively investing in the stock market while also stockpiling cash to buy real estate or create trust funds for heirs, Owens said. Real estate and trust funds, in particular, are the main vehicles through which wealth gets passed down, she added. 

In the aftermath of the coronavirus pandemic and the murder of George Floyd in Minnesota, Black families have started paying more attention to the economic inequalities in the U.S. and are focused on building wealth perhaps more than ever, Owens said. Likewise, a 2021 survey from U.S. Bank found that more Black Americans aspire to pass wealth on to their families and communities than any other racial group surveyed. 

With the right financial choices, a longer life expectancy can help make that goal of generational wealth come true, Owens said. Ashley Fox, a former Wall Street analyst turned financial educator, said the key is for Black Americans to start prioritizing saving and investing money and resisting the urge to spend it. 

"Us living longer means we are as healthy as we can be, but we also want to make sure we don't run out of money," said Fox, who is Black. 

"No magic bullet"

To be clear, an investment portfolio alone isn't the key to Black America building its wealth. Years of discrimination in housing, income, education and other areas have historically kept Black Americans far behind their White counterparts, and disparities caused by racial biases continue to exist.

For example, homeownership rates among White, Hispanic and Asian families have grown by at least 51% over the past decade but dropped about 1% for Black Americans, according to National Association of Realtors data. Black students have less access to college-ready courses while in high school compared to White students, according to the United Negro College Fund. The median household income for White families was $84,600 compared to $51,600 for Black families, according to a Pew analysis of 2018 Census data.

Housing discrimination causes generational wealth gap between White and Black Americans 11:28

The federal government must pass laws that help eliminate systemic racism, many researchers on the subject say, arguing that fairer policies combined with individual efforts toward building wealth will forge the path toward racial equality. 

"While there is no magic bullet for racism, access to wealth and the security to pass it down from one generation to the next would go a long way toward changing the economic trajectory for Blacks," Darrick Hamilton, an urban policy professor at the New School in New York, said in an op-ed piece for Fast Company. 

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