Yet another survey confirms what we already know: Blacks don’t save as much as their white counterparts.
According to Prudential’s new study–the African American Financial Experience–60 percent of African-Americans have less than $50,000 in company retirement plans and only 23 percent have more than $100,000. They’re also three times more likely to raid their 401(k) or other retirement plans to meet immediate financial needs, the study says.
Prudential’s findings echo research by Ariel Investments, which looks at middle class blacks. (According to Ariel’s July 2010 study, the median assets blacks have retirement plans is about half the amount that whites have accumulated: $56,000 compared to $106,000.)
This issue has not gone unnoticed in corporate boardrooms. One company that is trying to narrow the retirement savings gap among minority workers is McDonald’s, which uses some unconventional (along with very traditional) methods to get black and Latino employees to save for retirement.
Why don’t blacks save more? Experts say African-Americans distrust the financial system because it has excluded them for so long. In fact, 78 percent of respondents to the Prudential survey said they feel financial services companies “have not effectively engaged the African-American community.” Most of them do not use or have access to financial advisers.