African-Americans Not Saving as Much in Workplace Plans

October 15, 2008 ( - A new survey has found that African-Americans are enrolled in a workplace defined contribution plan in the same numbers as Whites, but save far less and have a lot less set aside for their later years.

A news release said the latest Ariel/Schwab Black Investor Survey found that about nine in ten of both Blacks and Whites who have access to a DC plan, contribute regularly.

However, the median monthly amount that Blacks contribute to their 401(k) plan is $169, while Whites contribute about 50% more, or $249 each month. As a result, the median total household savings for retirement reported by Black respondents is $53,000 compared to the figure for Whites of $114,000, according to the news release.

Although 45% of Blacks under the age of 50 (compared to 26% of Whites) say they want to retire by age 60, they are half as likely to cite retirement as their most important goal when saving and investing (after controlling for income, education, age, and other key demographics), the news release said. Among those older than 50, however, reality has set in: 24% of Blacks and 9% of Whites still plan to retire by age 60.

“The problem is that people don’t start saving for retirement early enough,” said Mellody Hobson, Ariel President, in the news release “This is [a] lifelong task, not something you start in middle age. The earlier people understand this, the better their chances of achieving their dreams.”

According to the announcement, about two-thirds of African-Americans (compared to about a half of Whites) say they would increase contributions to their retirement plan if employers provided access to financial advisers, seminars about retirement investing, and/or education about the features of the plan.

The random sample survey of 503 Black and 506 White households earning over $50,000 annually is the eleventh for Ariel-Schwab (See Both Black and White Investors Feel “Very Responsible” for Retirement Planning ). It was administered by telephone between June 11 and July 13, 2008. The survey was conducted by Argosy Research.