Around 50 million people in the US identify as Black Americans, or more than 14% of the population. But this sizeable cohort is more likely to be financially disadvantaged according to a new report.
It shows that Black Americans are more likely – on average – to have lower incomes and assets along with problematic debt. And when it comes to retirement, there are some clear challenges that may not be adequately addressed by financial planning.
The EBRI report reveals the results of a survey of more than 2,700 Americans including 520 Black workers and 481 Black retirees. It highlights that confidence in having a comfortable retirement increases with income among all demographics, but Black Americans with incomes below $75K and below $35K were more likely to be confident than non-Black respondents.
But this does not mean that this cohort will actually have a comfortable retirement, especially given the higher likelihood of having financial challenges before retirement. Black retirees who participated were more likely than others to say that retirement is worse than they expected, that their expenses are higher than expected, and less likely to say they could, within reason, spend money as they wanted.
Black Americans are also more likely to have retired earlier and more likely to have done so due to health issues or disability (44%) compared to non-Black respondents (32%). And they are almost twice as likely to be working for pay post-retirement (66%) than non-Black participants (35%) with most citing necessity to cover the cost of living.
“We found that Black Americans reported disproportionately lower financial resources, and that impacts how they feel about retirement and financial security,” says Craig Copeland, director, Wealth Benefits Research, EBRI. “Still, there are some modifications in the financial system that could help improve their prospects, such as more help balancing competing financial priorities, like debt reduction, supporting family and building long-term savings. In addition, Black Americans are more likely to want help from financial advisors with figuring out their life insurance needs and creating a will or estate plan.”
These priority requirements for advice from advisors differs from non-Black respondents who were more likely to say they need help in figuring out if they have saved enough for retirement.
For those Black Americans who took part in the survey that reported incomes above $75K, there are still clear financial challenges, such as being more likely to consider debt to be a problem for their household (63%) than non-Black Americans (45%). Non-Black Americans were more likely to report having savings of $100,000 or more at each income level compared with Black Americans.
Black Americans are more likely to say debt is impacting their ability to save for retirement or to live comfortably in retirement than others earning the same and although 77% of Black Americans with higher incomes said they personally saved for retirement, this is lower than the 87% of non-Black Americans who said this.
“Overall, Black Americans view retirement similarly to others with comparable financial means,” said Lisa Greenwald, CEO, Greenwald Research. “For example, middle and upper-income Black Americans were just as likely to feel knowledgeable about managing their day-to-day finances and saving and investing for the future. However, Black Americans, on average, have lower financial means [and] having debt is also one of the largest indicators of individuals not being able to save, build wealth, and live comfortably in retirement. Despite these challenges, Black Americans are still optimistic for their futures, as shown by their high levels of retirement confidence across the income spectrum.”
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