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October 12, 2007
Survey: African-Americans Saving Considerably Less for Retirement
A new survey had found that African-Americans are saving considerably less for retirement than whites. The Charles Schwab Corporation and Ariel Mutual Funds, who co-sponsored the survey, said that employers play "a crucial role" in addressing the situation.

The 10th Annual Ariel-Schwab Black Investor Survey, released by Ariel Mutual Funds and The Charles Schwab Corporation on October 11, shows that African-Americans save far less money than whites and "are no more likely to be investors today than they were a decade ago," according to a press release accompanying the survey report.

The survey was conducted among 500 African-Americans and 500 whites earning more than $50,000 annually. It found that the median amount of money saved by blacks ($48,000) is less than half the median amount saved by whites ($100,000). It further found that monthly median savings is $261 for whites compared to $182 for African-Americans. .

In the first Black Investor Survey conducted in 1998, 57 percent of blacks owned individual stocks or stock mutual funds, compared with 81 percent of blacks. This year, while the percentage of whites who are stock investors dipped slightly compared to a decade ago (76 percent) the percentage of blacks who are stock investors is still the same as in 1998, despite having risen as high as 74 percent in 2002. "The data is troubling because it suggests that barriers to investing are just as formidable as they were a decade ago. Our industry and our community must address this challenge aggressively," said Ariel President Mellody Hobson in a press release. "Government and employers also play a crucial role."

The latest survey also shows that retired blacks have median savings that are a fraction of the savings of their white counterparts--$73,000 compared to $210,000. The survey found that blacks are more likely to retire earlier than whites (average age of 59 for blacks compared to 61 for whites). They are also more likely to rely on a pension or Social Security than a 401(k) plan or other defined contribution plan.

"Most Americans' first, and sometimes only, exposure to investing is through their workplace," said Lisa Toppin, vice president of employee development and inclusion with Charles Schwab. "Employers need to find ways to get the message out about how to take charge of our finances, and we need to start building understanding and awareness at an early age."

According to the survey, African-Americans are less likely than whites to calculate the amount of money they need to live comfortably in retirement. But Ariel and Scwhab note that "those who consulted with financial professionals were much more likely to have saved more than $100,000 by the time they retired, and were much less likely to have retired early."

"With the right combination of planning, discipline and patience, a retirement goal can go from dream to reality," said Toppin.


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