Retirement Planning Equals Success: What African Americans Must Do to Build Their Nest Eggs
Hobson, Mellody, Black Enterprise
WE ASK CHILDREN ALL THE TIME, WHAT THEY WANT TO do when they grow up. Kids frequently have a vision of how they imagine themselves as adults--what they want to do, who they want to be. Unfortunately, as we get older, many of us lose this ability to see our future selves. When was the last time you pictured yourself at 80? Yet, it's likely many of us will live well past 90. So the future--specifically your retirement--is definitely something to think about and plan for.
Sadly, the concept of saving for retirement does not resonate in our community the same way it does for our white counterparts. In fact, all else being equal (income, age, etc.), African Americans are 50% less likely to list retirement as their primary investment goal.
Great-West Retirement Services, one of the largest retirement record keepers in the country, recently conducted an extensive survey encompassing more than 20,000 active retirement plan participants and looked at results by ethnicity and gender. The findings were eye-opening. Black males earned 20% less than white men, $49,100 versus $61,300, and deferred less of their salaries to retirement savings, 1.9% compared with 4.5%.
More worrisome--the account balances for black males were a quarter the size of their white male counterparts' accounts, $11,800 compared with $47,300. The black men surveyed had worked 33% longer at their companies, so they had more time to contribute to a retirement plan. Salary discrepancy is a real issue, but the gap in account balances was driven more by low deferral.
Similarly, black women fell short. Those surveyed contributed 3:3% of their salaries to retirement, while white women set aside 4.8%. Despite earning only 8% less than white women, black women's retirement account balances were a third the size ($13,100 and $38,200, respectively).
Another unsettling finding was our community's lack of investment diversification, which is critical in helping investors reap rewards during different market cycles and minimizing risk Of the groups Great-West surveyed, African …
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Publication information: Article title: Retirement Planning Equals Success: What African Americans Must Do to Build Their Nest Eggs. Contributors: Hobson, Mellody - Author. Magazine title: Black Enterprise. Volume: 39. Issue: 3 Publication date: October 2008. Page number: 48. © 2007 Earl G. Graves Publishing Co., Inc. COPYRIGHT 2008 Gale Group.