Closing the retirement savings gap

There's Still Time To Build A Golden Nest Egg

Americans–particularly women and minorities–must start saving more aggressively today for a financially secure future.

According to the first National Summit on Retirement Savings, held in Washington, D.C., in June, older women are twice as likely to be poor as older men, and elderly African Americans are three times more likely to live in poverty as elderly white Americans. In 1994, 32% of Hispanics and 40% of African Americans received pension benefits vs. 52% of white Americans. Only 32% of female retirees received pension benefits (vs. 55% of male retirees), and the median benefit for women was only half that for men.

A recent study by Ariel Mutual Funds and Charles Schwab & Co., however, offers some encouraging news. More than half (57%) of African Americans with household incomes of $50,000 or more (vs. 81% of their white counterpacts) have invested money in the stock market. Sixty-six percent of high-income African Americans (vs. 62% of whites) say they save and invest at least monthly, although blacks tend to prefer more conservative savings vehicles.

Besides reading BLACK ENTERPRISE, you can get how-to information on saving and investing by tapping into such groups as the American Savings Education Council (www.asec.org), the Employee Benefit Research Institute (www.ebri.org) and the JumpStart Coalition for Personal Financial Literacy (www.jumpstartcoalition.org). Remember, the earlier you start saving, the larger your retirement nest egg will be.

African American Investment Profile
On average, African Americans plan to retire at age 58 and expect they’ll need an income of $87,000 annually.

79% of high-income African Americans report they/their spouse have money in a retirement program.

59% report having money in a 401(k), and 36% in an IRA.

On average, one-third of current savings/investments (about $42,000 of $117,000) is invested in retirement accounts.

One-third (34%) plan to use Social Security as one-quarter or less of their retirement income; another third (35%) feel Social Security will no longer exist when they retire.

Just aver one-third (37%) have whale or universal life insurance policies, valued at $288,000, as part of retirement income.

Source: The Ariel/Schwab Black Investors Survey: Saving and Investing Among High Income Black and White Americans, Ariel Mutual Funds and Charles Schwab & Co., 1998

Proportionately, African Americans and whites have about the same amount invested in retirement accounts (36% of total savings and investments for blacks vs. 39% for whites)

Of this amount, how much money do you have in accounts specifically for retirement, such as IRAs and 401(k)s?

African
American

White
$5,000 or less 31% 21%
$6,000-$20,000 15 18
$21,000-$49,000 12 10
$50,000-$100,000 11 13
Over $100,000 5 16
Note sure 26 23
Source: The Ariel/Schwab Black Investors Survey: Saving and Investing Among High Income Black and White Americans, Ariel Mutual Funds and Charles Schwab & Co., 1998
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