Angela Chevaux and her husband make a good living in York, Pennsylvania. She’s an insurance claims supervisor and he’s in construction. Yet a recent inheritance from her stepfather changed her life. He left them a retirement account, a life insurance policy, an annuity – and her husband and brother inherited an old farmhouse in a secluded spot with a pond.
“We were able to buy the property – the other half – from his brother for a decent price,” says Chevaux.
She thinks they paid about half of what the appraised value would have been.
They renovate the farm to live in and sell their own house, saying goodbye to 11 years of extra payments.
“We will no longer have a mortgage [ages] 50 and 59!” she laughs.
His stepfather also left Chevaux’s 24-year-old son a money market account.
“He had given our son college money before he passed,” she says. “So that allowed him to pay off the rest of his college debt.”
Her son is a financial adviser and has invested the rest of his inheritance, intending to use it to buy a house.
The family’s financial fortunes show one way America racial wealth gap has persisted – and even expanded – over the generations. White adults are more than twice as likely as Black and Latino households to get significant financial support from parents or other elders. That’s according to a new poll by NPR, the Robert Wood Johnson Foundation and the Harvard TH Chan School of Public Health.
Dorothy Brown, Professor of Tax Law at Georgetown University, wants more white families to talk about these intergenerational benefits.
“Because you have black Americans doing everything they’ve been told is right and not moving forward,” she says. “And they’re scratching their heads like, ‘How come I’m not doing better than me? How come I don’t do better than the guy in the cabin next to me? ”
The new poll finds that 38% of white adults say they have received at least $10,000 in gifts or loans from a parent or older relative. Only 14% of black adults receive gifts or similar loans. The share is 16% for Latinos and 19% for Native Americans.
Brown says this divide reflects generations of segregation and racism, especially in housing policies. Racially restrictive covenants prohibited whites from selling or renting their homes to African Americans or other minority groups. And Federal Housing Administration policies supported such restrictions.
“So if your grandparent has a house that was insured by the FHAit was because they were white,” she said. “You don’t think about it, but it was.”
The racial wealth gap is also evident in many other survey questions.
“When people talk about the American dream, it’s here,” says Robert Blendon, a Harvard professor emeritus of health policy who worked on the poll.
A lot of black, Latino and Native American adults say they want to move to better housing and expect their kids to go to college, but they don’t have the money to pay for those things.
“These minority communities are going to … have to borrow everything in a very risky environment for that,” Blendon says, “and they have nothing to at least help defray some of the cost.”
What’s at stake, he says, is the ability to make the choices that can help families and future generations move forward.
For black Americans, wealth is more likely to increase
For African Americans, in particular, tax expert Brown says the generational transfer of wealth is actually more likely to go the other way – with children helping parents who suffered under Jim Crow.
This is the story of Theodore Bailey, who is 76 and remembers a difficult childhood in segregated Nashville.
“My father died when I was 3 years old,” he says. “My mother was a single mother with four sons.”
Her father died while serving as an army cook during World War II, leading to a major rift for Bailey. As a war orphan, he was able to attend college thanks to the GI Bill, which launched a successful career as an engineer and missile designer. Early on, Bailey sent money to help her mother get by.
“I knew she was struggling, you know. And at the time, I didn’t have much to lose, but I was sending her everything I could,” he says.
Now retired to Arizona, Bailey says he has always helped his family. This includes supporting a brother who lost his job, sending his grandchildren to college, and being there for others along the way.
“Oh,” he laughs, “there are always cousins and nephews and things that want to borrow money, and often they don’t pay it back.”
Research shows caregivers like this are serious depletes the wealth of black American college graduates. Bailey says he now has to cash out more of his IRA than he would like in this bad market, to meet his own expenses.
He does not know how much he will have left to pass on to his children and grandchildren.
“I invested in them, putting them through college and so on,” he says. “I hope they can take care of themselves.”
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