Published: November 2007

Retirement Racial Gap

New survey finds that African-Americans save far less money than whites and are no more likely to be investors today than they were a decade ago.

According to the 10th Annual Black Investor Survey, the median amount of money saved by blacks is less than half of their white counterparts ($48,000 versus $100,000). On a monthly basis, median savings is $182 for blacks vs. $261 for whites. The survey was conducted by Ariel Mutual Funds and Charles Schwab Corp. Survey results were released on October 10 at the first Ariel Schwab Black Investor summit in New York.

When the first survey was conducted in 1998, 57% of blacks and 81% of whites said they owned individual stocks or stock mutual funds. A decade later, still just 57% of blacks are stock investors, compared to 76% of whites. During the past ten years, the number of blacks who own stocks or mutual funds rose as high as 74% (in 2002) only to fall again, while white participation has consistently hovered within a few percentage points of 80%.

"The data is troubling because it suggests that barriers to investing are just as formidable as they were a decade ago. Our industry and our community must address this challenge aggressively," said Ariel President Mellody Hobson."

Black Retirees Need More but Save Less for Retirement

Results of a survey comparing how well blacks and whites prepared for retirement show that retired blacks have saved an average of $73,000 compared to $210,000 for whites. Blacks typically retired earlier than whites (59 vs. 61) and were more likely to rely on a pension or Social Security rather than a 401(k) plan.

"Most Americans' first, and sometimes only, exposure to investing is through their workplace," said Charles Schwab’s v.p. of employee development Lisa Toppin, "Employers need to find ways to get the message out about how to take charge of our finances, and we need to start building understanding and awareness at an early age."

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