Retirement In Black And White


The headline from the latest Ariel-Schwab Black Investor Survey is that blacks are moving backward, not forward when it comes to achieving financial freedom. That was certainly a wake-up call for me, and I hope for all of us. Since this year marked the 10th anniversary of the survey my firm conducts each year with The Charles Schwab Corp., I had high hopes our findings finally would reveal a narrowing of the wealth gap. Instead we learned just the opposite.

African Americans have less than half of what their white counterparts have saved–about $48,000 compared to $100,000. And, if you peel back the survey results even further, the monthly savings for blacks is roughly $180 compared to $260 for white Americans. This isn’t a picture that gets better with time. In fact, this year, Ariel and Schwab also conducted a survey of retirees. It turns out black retirement accounts are worth about $73,000, compared to $210,000 for whites. Our data also showed that African Americans tend to retire a few years earlier, meaning fewer dollars have to stretch even further. What is most alarming to me is that these enormous gaps exist between black and white Americans of the same age, household income, and education levels.

Not only do African Americans still save at lower rates than their white counterparts–even worse, blacks are no more likely to be investors today than we were a decade ago. When the Black Investor Survey began in 1998, 57% of blacks invested in the stock market. Participation climbed as high as 74% by 2002, but after the dot-com bubble burst many got scared and pulled out of the stock market. Today, we are back where we started, with only 57% of our community being stock and mutual funds investors compared to 76% of whites. This is especially problematic because over the long haul, the stock market remains the country’s greatest wealth engine. And by not investing, too many of us are missing out.

But simply acknowledging the problem won’t solve it. In October, Ariel and Schwab hosted a Black Investor Summit in New York City. Attended by leaders across business, government, academia, and the nonprofit sector, the intent was to discuss what can be done collectively to help people achieve financial security in retirement. Additionally, we released The Ariel-Schwab Black Paper, which details a decade of research, and, more importantly, we hope will spur a national dialogue on saving and investing.

Our past surveys have shown that the gateway to investing for blacks is often our first job and its 401(k) plan–because most of us don’t grow up talking about investing at the dinner table. Knowing this, Ariel and Schwab asked several companies to examine their 401(k) plan participation by race. Diversity data is already information companies are legally obligated to provide to the U.S. Equal Employment Opportunity Commission. Well, Ariel CEO John Rogers is a board member of McDonald’s and its management took us up on the idea. Their findings and commitment to their employees was


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