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July 21, 2010 at 08:00 PM
One area of the retirement planning population has been hit particularly hard by the recession. Middle-class African-Americans are more likely than white investors to have curtailed their saving and investing in order to make it through the economic crisis, according to the 2010 Ariel Black Investor Survey from Ariel Investments. The Chicago-based mutual fund company also found nearly half of all African-American investors dipped into savings to make ends meet in the last two years (compared to 31% of white investors).
“In times of economic hardship, people have to make difficult decisions,” said Mellody Hobson, Ariel’s president, in a statement. “Unfortunately, the resulting trade-offs mean many in [the African-American] community are slipping even further behind.”
Additionally, 27% of black investors who participate in a 401(k) reduced the amount they contribute per month (compared to 16% of white investors), and 22% of non-retired black investors borrowed or withdrew money from a retirement account (compared to 14% of white investors). Even after controlling for various socio-economic factors, black investors are nearly twice as likely to have reduced their contributions to 401(k) plans relative to white investors.
The median amount black investors contribute to their retirement plans is $230 per month, compared to $337 a month contributed by white investors. The median assets black investors have accumulated in their current retirement plans is about half the amount white investors have accumulated: $56,000 compared to $106,000.
