McDonald’s Supersized Retirement Plans

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To stanch the bleeding of valuable talent, McDonald’s in 2004 began offering a rich retirement savings perk. Employees who put 5 percent of their salary in the company 401(k) receive a company match of as much as 11 percent, turbocharging their savings right off the bat. To make sure employees take advantage of the program, McDonald’s has made enrollment automatic. And to ease the pain of automatically deferring 1 percent of pay, the company gave managers a one-time, 1 percent salary increase.

But persuading prized employees that the benefit is reason enough to stay with McDonald’s for the long term is an ongoing challenge. Skepticism about investing runs especially high among African Americans, who make up 15 percent of the company’s manager pool. Research shows that blacks, in the aggregate, are reluctant to save. According to a 2008 study by Ariel Investments and Charles Schwab, blacks save an average of $169 a month for retirement, while comparable whites (in terms of household income) contribute about $249 a month. Race and ethnicity trump gender—and even salary—in the factors that predict whether a person will save for retirement.

Preparing for the future

Why don’t blacks save more? The reasons are complex, but the underlying theme is cultural. “African Americans are distrustful of the financial system because it has excluded them for generations,” says Andrés Tapia, chief diversity officer at Hewitt Associates, the benefits-consulting giant. Hewitt’s research shows that African Americans consistently put home ownership and college ahead of retirement goals. Owning a home and educating children become a huge priority, explains Tapia, “if you are the first person in your family to do it.”

Preparing for the future can also be controversial in the black community. “If your mama lives with you—and others in your extended community are struggling to get by—putting aside money that you can’t touch for the next 15 to 20 years feels selfish and inappropriate,” Tapia says.

Indeed, for many blacks, retirement is more a dream than a priority. The Ariel-Schwab survey found that African Americans under the age of 50 are nearly twice as likely as comparable whites to say they want to retire by 60, but they are half as likely to cite retirement as their most important savings goal.

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