Minority retirement planning
by July 7, 2009 11:59 am 75 views
A new survey by Ariel/Hewitt suggests Blacks and Hispanics have lower participation rates and contribute less to 401(k) retirement plans than whites and Asians.
The Ariel/Hewitt survey analyzed 401(k) info for nearly 3 million employees across 57 large, primarily FORTUNE 500 companies in the U.S.
According to the survey, 66% of African-American employees and 65% of Hispanic employees participate in their company’s defined contribution plans, compared to 77% of white workers and 76% of Asian workers.
“401(k) plans are now the primary way Americans save for their golden years. Most are unaware there are significant savings disparities in 401(k) plans across racial and ethnic groups. This study reveals important differences that must be addressed if retirement security is to be a reality for all Americans,” Mellody Hobson, president of Ariel Investments, said in a statement.
KEY SURVEY RESULTS
• White employees contributed 7.9% of income, compared to Hispanic and African-American workers, who contributed 6.3% and 6%, respectively. At 9.4%, Asian workers had the highest contribution rate of all groups.
• Employees who earn between $30,000 and $59,999 show a significant difference in 401(k) account balances: African-Americans ($21,224), Hispanics ($22,017), Asians ($32,590), and whites ($35,551).
• African-American employees who earn $120,000 or more have saved $154,902 in their 401(k) plans compared to $223,408 for white workers in the same pay range.
• African-Americans had 66% of their 401(k) assets invested in the stock market. By comparison, whites and Asians had 72% and 73%, respectively, of their 401(k) plan assets invested in equities. Hispanics had 70% of their assets invested in equities.
• Nearly two of every five African-American workers and almost a third of Hispanic workers borrowed from their retirement accounts compared to just one in five white workers. By contrast, Asian workers were the least likely to take a loan against their 401(k) plans, with less than one in five doing so.