The economic downturn has hit everyone pretty hard. But for many African-Americans, uncertain finances and “funny money” are just a way of life.
A new study—the African American Financial Experience—conducted by Prudential found that 60 percent of Blacks have less than $50,000 in company retirement plans (for Whites, the amount was nearly double), and only 23 percent have $100,000 or more.
According to the study, we are also more likely to dip into our retirement funds to get us through rough financial patches and to meet our financial needs, and be more skeptical of building relationships with financial professionals.
The study also found:
- While 82 percent of African Americans believe maintaining their current lifestyle in retirement is critical, only one-third feel confident they will be able to accomplish this.
- African American decision makers tend to be more independent learners when it comes to finances, relying on books, financial websites, financial seminars and conferences, and their employers for information.
- African American women are driving financial decisions in their households. Of the African American women surveyed, 72 percent indicated that they are the primary financial decision-makers in their households and do not share financial decision-making equally. This compares with 69 percent of African American men, and 54 percent of the general population.
- African Americans are nearly twice as likely to have a dream of starting a small business as those in the general population (35 percent vs. 19 percent), and view starting their own small business as a path to financial freedom. However, more than half of those with an interest in starting a small business say a lack of capital has been the primary hurdle to getting started.
While the savings gap between African-Americans and our White counterparts may be due in part to a gap in wages and our proclivity to help our friends and family through rough financial times, the study shows that many of us are taking steps to plan for the future.
Saving money can be tough, but by implementing a few easy steps you can ensure you’re set when it’s time to retire.
Automate your savings: Nothing makes saving easier than not having to think about it. Whether you save $25 or $2500 per month, make sure the money gets taken directly out of your paycheck or bank account.
Pocket Your Raise: The next time you get a raise (or a bonus) at work, don’t increase your spending, instead bank the extra cash in your retirement account and watch the balance grow.
Do Your Homework: There are a myriad of savings accounts out there from 401Ks to 403Bs, IRAs and annuities. Shop around and find the account, or accounts, that will give you the best return on your investment.
How are you saving for the future, Clutchettes and Gents?