Interview with Rodney Brooks Author, Fixing the Racial Wealth Gap
Rodney A. Brooks (no relation), a veteran newspaper journalist, writes about retirement and personal finance issues, and racial, wealth and health disparities. His columns currently run in U.S. News & World Reportand AARP’s Senior Planet. He has also written columns for The Washington Post and USA TODAY.
He is author of the book Fixing the Racial Wealth Gap: Racism and Discrimination have put us here, but this is how we can save future generations. He is co-author of Retirement Planning Essentials: A Guide to Living Well Without Running out of Money. He is also author of Is One Million Dollars Enough: A Guide to Planning for and Living Through a Successful Retirement. He is also a successful ghost writer, and has written a half-dozen other books, mostly for financial planners.
Q. Rodney, thank you for joining us to discuss your impactful book. Your career in journalism has spanned decades and you've been associated with such esteemed organizations as the Washington Post and USA Today. Could you share what led you to pursue this path and how your interest in financial issues developed over time?
A. The journalism part is easy. I decided to be a journalist when I was in junior high school. Though there were no role models in my life, but I read newspapers and watched TV news regularly. I lived in Northern New Jersey, so I watched New York TV stations and was motivated by people like Melba Tolliver on WABC-TV’s Eyewitness News, Gil Noble on NBC-TV, and Charlayne Hunter-Gault, who was the Harlem Bureau Chief for the New York Times. I worked on newspapers at my junior high school, high school, and college. That led me to major in journalism at Cornell University.
I became interested in financial news when I worked for a newspaper in Asheville, North Carolina. I was a county government reporter when a new editor came aboard and promoted me to Business Editor. I later took jobs as a business writer at the Philadelphia Evening Bulletin and later the Philadelphia Inquirer, where I became assistant business editor. From there I joined USA TODAY where I was promoted to Deputy Managing Editor and stayed for 30 years. Towards the end of my tenure there I became Deputy Managing Editor/Personal Finance Editor and later added the responsibilities of retirement columnist. When I left USA TODAY my column moved to the Washington Post. Now it appears in U.S. News & World Report and AARP’s Senior Planet.com. I also started writing for publications such as National Geographic and History.com.
Q. Exploring the racial wealth gap and seeking solutions is both crucial and timely. What inspired you to delve into this significant topic?
A. Before becoming USA TODAY’s personal finance editor, I realized that many of the young reporters who worked for me needed personal finance help. I pushed them to sign up for the company 401(k) and save for retirement. My friends and colleagues would also call me for financial advice. People told me I should write a book on personal finance for Black folks because our issues were in many ways unique. Eventually I returned to school, at Georgetown University, and received a certificate in financial planning.
My first book was a collection of my USA TODAY columns, Is $1 Million Enough, basically a retirement guide. But after I retired from USA TODAY, I had time to write the book that my friends and colleagues had been urging me to write. When COVID happened, the death of George Floyd and the Black Lives Matter/social justice protests pushed me to combine Black financial planning and guidance with the racial wealth gap.
Q. Your ability to concisely cover the history of economic racism is commendable. At times when I reflect on the Civil Rights Movement and the election of the first African American mayors, it seems the emphasis was on education, justice, and jobs. Did economic injustices like exclusion from financial services, redlining, and entrepreneurial opportunities take a back seat during that era or am I wrong on that front?
A. For me, it was important that before I talked in my book about the racial wealth gap, and why the average wealth of a white family was 10 times that of a Black family, that I talk about the history of economic racism and discrimination – slavery, Jim Crow laws, racism, segregated schools and more. Black farmers were cheated out of their land and suffered racism at the hands of the U.S. Department of Agriculture Department. Then there was the discrimination against the Black GIs returning from World War II, how they were cheated out of GI benefits that were given gladly to white veterans. And the Levittown communities built by racist developers to provide white veterans with homes in the suburbs with that white picket fence legally excluded Blacks. In fact, those homes had written into their covenants that the homes could not be sold or leased to Blacks. And you wonder why the white home ownership rate is 30 points more than Black home ownership in the U.S.
Q. Recognizing the prevalence of racism on individual and institutional levels, especially in states under total Republican control, how would you advise African Americans to navigate these environments and still achieve their financial goals?
A. In these states, it is even more important to take care of yourself - save, invest, and move to a Blue State. Ok, Just kidding there. But we’ve been a resilient race for 400 years. The things we have survived would have destroyed many other people. You need to save, invest and help others. Buy homes, create generational wealth and help your children get a proper education. You need to worry about yourself, because you will not get help that may be offered in more liberal states. And become active in voting and urging others to vote. We need people in control who will look out for our interests.
Q. Many individuals in our community in their 50s and 60s find themselves on unsound financial footing. Is it too late for them to engage in this process, and beyond reading your book, what immediate efforts should they be undertaking?
A. I often look back on a radio interview I did a few years back. I woman called in and said she had put her daughter through an Ivy League college but in the process had saved nothing for retirement.
I always say it’s never too late to start saving, even if it’s in your 50s or 60s. But you will have to manage your expectations. You will need to work longer or expect to live a lesser lifestyle in retirement. You should also dramatically step up your savings. You don’t have 20 years to get the benefits of growth. You see so many people working into their 70s and 80s. They discover that their Social Security check is not enough to live on. The average monthly SS check is only $1,700. The averages are lower for Black folks for a variety of reasons. Most financial advisors recommend against a reverse mortgage. It’s a way to get money from equity in your home, but it’s also a way to destroy generational wealth. But consider it only as a last resort.
Q. Your perspective on credit scores in your book is intriguing. Could you elaborate on how credit scores fluctuate and their impact on wealth building?
Black Americans have lower credit scores than whites across all ages income groups. Part of it is the history of racism and discrimination. But we as a race have less credit, and more debt. Student loan debt has made things even worse. A result is low credit scores – and higher interest rates for things like cars and mortgages. Low credit scores can also mean you pay higher rent and more for utility services.
Q. In your book, you discuss the unique challenges faced by African American women. Can you provide an overview of these challenges and suggest ways to address them?
It’s tough to talk about all the problems faced by Black women in a few paragraphs. But let’s start with the fact that they face both racial and gender discrimination in jobs and in wages. Starting with lower wages, they take time off to raise children. Black women are also more likely to be caregivers to spouses or parents, meaning more time off from careers. So, they end up with less savings, and less time to build retirement savings. On top of all that, because they have spent less time in their careers, they also have lower Social Security checks. Remember your Social Security is based on the length of your working career and your career wages.
Q. While many African Americans view entrepreneurship as the key to financial independence, your book highlights its challenges. Could you elaborate on why starting a business can prove difficult?
A. Any Black entrepreneur will tell you that their biggest challenge is working capital. Very few are able to get bank financing. They use savings and loans from friends and families. That means many are undercapitalized. And because of that, they are more likely to fail in an economic downturn. It was estimated that 40 percent of Black businesses folded during the COVID pandemic, many for good.
Q. You offer practical steps for accumulating wealth. What advice would you give to a young couple in their 20s or 30s as their first step in this process?
The first step I always advise young people is to hire a financial planner to help you set up a financial plan. The second is to max out your company 401(k). You need to at least contribute an amount equal to the company match. If the company matches your contributions up to 4 percent, you should at a minimum contribute 4 percent. But the best option is to contribute 8 to 10 percent. And finally, start an emergency fund. Most people would struggle to pay even a $500 emergency expense, like a car repair. Before you start a savings plan, set aside money for emergencies – as much as you can afford. This money should not be invested, but put into a savings account so you have easy access if and when you have a financial emergency.
Q. Your book is a valuable resource for financial literacy efforts in schools, religious and civic institutions, and community organizations. How do you suggest spreading this message, especially among the generations whose lives seem to revolve around social media?
Financial literacy efforts are growing at Black churches and in public schools. I like to focus on students, but kids are never too young to start learning about money. You should teach your kids every chance you get. Have conversations about money at the dinner table. Help them start savings accounts and make sure you sign up for a 529 plan to help save for your children’s college education. And children and young adults should also help to teach their parents and grandparents. It’s never too early or too late for financial literacy education.
Thank you, Rodney, for contributing this much-needed resource to the conversation on financial literacy. To learn more about Rodney and purchase copies of Fixing the Racial Wealth Gap visit RodneyABrooks.com