In 2007, Yolanda Hawkes needed advice. The Atlanta resident was ready to â€śinvest in something besides a 401(k)â€ť as she focused on her retirement planning. So she called on Danny Freeman, financial adviser and author of Building Wealth through Spiritual Health (Darda Press; $19.95).
To help Hawkes build assets, Freeman had her open a traditional IRA. Financial experts such as Freeman typically advise employees to max out their 401(k) contributions, regardless of whether their employers match, and then to invest in a Roth IRA or traditional IRA as well.
Only two in 10 African Americans believe they are on track to meet their goals for retirement, compared to 34% for the general population, according to The African American Financial Experience, a study by Prudential Financial Inc. Nearly 40% of those surveyed say they are way behind or havenâ€™t even started. Almost half (46%) admit to needing help in specific areas when making financial decisions. With the financial markets having recovered from the losses tied to the Great Recession, scores of African Americans continue to miss out on the recovering equity markets.
The importance of investing for retirement is underscored when one considers that a person will need at least 70% of his or her pre-retirement income to maintain the same standard of living once he or she stops working, according to experts. Social Security alone will not provide this level of income.
For 39-year-old Hawkes, a senior corporate recruiter for a large consumer goods manufacturer, she estimates that she will need $2 million in her retirement accounts by the time she stops working. Thus far, she has amassed nearly 2.5% of thatÂ and continues to contribute 7% of her annual salary, which is in the high five-figure range. If she stays on track, assuming an 8% to 10% annual return, she could see her retirement funds amass to a range of $800,000 to $1.1 million by the time she turns 62.
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