*510 IV. Recommendation

Mounting a constitutional challenge on disparate impact grounds is extremely challenging and less than likely to succeed. As mentioned above, the Supreme Court, in the wake of Mass. v. Feeny, has made any constitutional challenge on the basis of disparate impact nearly unachievable. The influence of this standard means that the institutional racism of the 1930s remains in effect to this day. Attempts have been made to correct the sins of the past; however, these amendments only serve as a band-aid and make a superficial attempt to address the deep-seeded imbalance of equity present in the Social Security system.

In order to see complete equity in the Social Security system, drastic changes must be made. However, these changes are also unlikely. Social Security is one of the most politicized bureaucracies in the country. Moreover, any attempt to alter or change Social Security has been referred to as the third-rail of politics, offering career ending consequences to those who dare mention modifying or challenging the status quo. However, in light of those challenges, it is important to discuss what can be done within the framework of the current system. The numbers are staggering: African-Americans and minorities are very unprepared for retirement. What can be done on a holistic level to ensure that African-Americans and other minorities groups are able to build a nest egg for themselves in anticipation of retirement?

This next section discusses what African-American and minority investors can do to prepare for retirement. This strategy takes a holistic approach to retirement and accounts for the primary reasons why African-Americans face such a high level of retirement insecurity in their older age. This model accounts for homeownership as a vehicle for retirement security, managing student-loan debt and making informed educational decisions, and finally using employer investment vehicles or personal investment vehicles to gain entry into the financial market.

*511 Possessing a home is a decisive element of a family's aptitude to stay economically secure in their retirement years. However, in 2011, only forty-two percent of African-Americans owned a home, compared to sixty-eight percent of Whites. Additionally, “African-American homeowners are eighty-six percent more likely than Whites to have an underwater mortgage.” The low homeownership rate among African-Americans is in part caused by the lasting vestiges of segregation, troubles accessing credit, and discriminatory lending policies. Homeownership remains the largest driver of racial wealth inequality in the United States.

Furthermore, access to retirement accounts remains extremely limited for African-Americans. It is reported that only 54.3% of African-American employees work for a firm that provides a retirement plan. Additionally, of those African-Americans who have access to an employer-sponsored retirement plan, only eighty-one percent participate. Those with employer sponsored plans often express confidence about relying on a workplace retirement plan to meet their financial goals. However, their low annual contributions result in below average retirement savings. Nearly three-quarters of African-Americans have less than $10,000 in retirement savings, compared to only 48.6% of White households. African-Americans are more likely to earn less throughout the course of their careers, resulting in less income for retirement. Additionally, “African-Americans are more likely to provide financial support to individuals outside their immediate family, including distant family members and close friends, leading to lower potential savings for retirement.” “White households with adults between the ages of twenty-five and sixty-four have *512 an average of 5.5 times more in retirement savings than similar African-American households.”

Additionally, as African-Americans (and lower-income Americans) represent an overwhelming proportion of Americans living with student-loan debt, it is important to begin the process of college savings soon. The African-American community as a whole places a great deal of importance on a college education and has high expectations in terms of their children's future education; a college savings account program done effectively offers an excellent opportunity to translate such intentions into action. Establishing a 529 savings account would be a start in terms of minimizing long-term the amount of debt that African-Americans carry coming out of college. Additionally, this would also serve to provide an incentive for lower-income Americans to attend reputable not-for-profit colleges. A 529 plan is a college savings account that is exempt from federal taxes. The account's name comes from the section dedicated to the account in the federal tax code. These plans offer investors tax benefits at both the state and federal level. Any U.S. citizen or resident at least eighteen years old can open a 529 account. 529 accounts come in two flavors: prepaid and savings plans. “Prepaid tuition plans and college savings investment plans. Those who open a prepaid tuition plan lock in the current costs of tuition in place of future prices which generally rise every year.” Those who open a 529 account are offered a tax-deferred investment vehicle. Additionally, they are able to make qualified withdrawals to pay tuition, fees, and expenses at “accredited colleges and graduate schools, including professional and trade schools.”

*513 The money contributed to a 529 account is invested in large, widely held mutual funds managed by reputable investment firms. Additionally, each plan includes options for the investor to choose from. Most importantly, a 529 account provides two important benefits: it places the funds earmarked for college tuition into a tax-deferred status allowing the investor to build investment income off a larger principle investment, and it provides a high-yield, low-risk investment platform to invest college savings offering all Americans the ability to receive a higher yield than a traditional savings account. The benefits mentioned above should be considered as a viable investment vehicle for African-Americans who have children. Investing in a 529 plan would serve to offset the high cost of tuition and would, in turn, lower the debt that younger African-Americans carry post graduation. This investment vehicle should be used with the intention of freeing capital post-graduation to allow for an early entry for college-age African-American to focus toward retirement savings.

Lastly, personal investment should be used as a tool when planning for retirement. African-Americans participate in the market through forms of personal investment at a far less rate than their white counterparts. Failure to have adequate personal savings in retirement leads to a dependency on Social Security as the primary source of income. It is imperative that, moving forward, African-Americans find ways to educate themselves on sound, safe investment strategies. To rely on Social Security as the sole means of retirement income is flawed. However, research suggests that “Social Security is the bedrock of retirement security for the African-American community. Forty-six percent of African-American seniors age sixty-five and over rely on Social Security for at least ninety percent of their income, compared to thirty-five percent of whites.” This information, combined with the average yearly income from Social Security for African-Americans over the age of sixty-five hovering at roughly *514 $14,514, indicates that many African-American retirees are living at or close to poverty.