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African-Americans and retirement

By Jennie L. Phipps ·
Wednesday, April 13, 2011
Posted: 3 pm ET

When it comes to retirement planning, African-Americans have some different attitudes and challenges compared to other segments of the population of a similar age and circumstance, according to a study released today by Prudential Financial.

The study polled 1,500 African-Americans who consider themselves family financial decision-makers. About 60 percent had annual incomes greater than $50,000. More than 70 percent were employed full time, and about 60 percent had at least a four-year college degree.

One of the retirement planning challenges of this group is the propensity to be unmarried. Half of African-American financial decision-makers are single, compared with less than a third of the general population, according to the study, which also points out that it's harder to save when there is only one income. More than 40 percent of the African-Americans surveyed said they saw lack of  discretionary income as their biggest financial hurdle. That's true of about 35 percent of the general population.

Nevertheless, the number of African-Americans contributing to workplace retirement plans is high at 83 percent -- compared to 87 percent among the general population. But the amount they've saved is low -- 60 percent have less than $50,000 saved in company retirement plans. Only 23 percent have more $100,000 in these plans, compared with 34 percent among the general population.

This segment of the population is also significantly less likely to own IRAs, individual stocks and bonds or mutual funds. They also are unlikely to have made a will, nor do they expect an inheritance from their parents.

Are there any special answers for African-Americans -- or other people who face similar challenges? Here are some suggestions extrapolated from the Prudential study:

  • Save. Commit to contributing to your 401(k) every month and getting any employer match. It's foolish to leave money on the table.
  • Manage debt. Be especially reluctant to borrow from retirement savings -- a trap that's easy to fall into when you don't have enough disposable income.
  • Get help. If you don't think you're treated well by large financial institutions, take advantage of community and faith-based financial services where you'll feel more comfortable.
  • Pay yourself first. Helping out children and family is important, but ensuring your own financial stability is a top priority. You can't help others if you don't pay your own bills and build your own nest egg first.
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April 14, 2011 at 1:10 pm

As long as I have been visiting this website, I have never encountered an article of this nature. This article is interestingly questionable.

Who are the other segments of the population being polled? Why are the other segments of the population unknown? And how many people of the other segmented populations were polled?

I think that there are a large group of people that encounter challenges regarding money, including African Americans.

The suggestions are valid. However, I think this articled needs to be addressed to other population groups, just in case you missed anyone.

April 14, 2011 at 11:30 am

I'm not sure who you are, but having polled only a mere 1500 people is only a drop in the bucket of the population, which is not a high enough number to gather an accurate or fair poll. The criteria has a biased and sarcastic overtone. There are a great many of African-Americans who have the know how, ability and means to save, not based solely on the poll that you alledgedly performed. By the way who are the "other people who face similar challenges?". One last thing, the suggestions extrapolated from Prudential, is common knowledge and not something new like you have suggested. Financial advisors like Susie Orman, and any 401k institution offers the same suggestions and advice..always has, and always will.

Dora Nguyen
April 14, 2011 at 9:52 am

Dear Jennie,

This is not a comment, but a friendly request. I like the segment you provided on "African Americans and Retirement". Would it be possible for you to do a segment such as this on Hispanics and another on Vietnamese? Even better, I would be interested in how families of mix races are doing when it comes to saving for retirement? I am a Hispanic woman married to a Vietnamese man. I always saved since I was little and continue to save. My two children are both at each end of the savings behavior, although, I know both try hard to save, but one has harder time with it.
Thank you.