The Harder They Fall: Diverging Black-White Wealth in Older Age Using the Health and Retirement Study

Using the Health and Retirement Study (HRS), we document that wealthier Black households experience slower wealth accumulation compared to White households with similar, higher initial wealth. Racial wealth accumulation gaps widen racial disparities in wealth levels late in the life cycle and contribute to the intergenerational transmission of racial wealth inequality. These conditional racial accumulation gaps are robust to portfolio composition controls and pertain to a population facing little or no earnings risk. Our findings challenge standard portfolio-based or earnings-based theories of racial wealth inequality. We argue that racial differences in wealth downside risks can help understand these patterns.