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August 07, 2015 at 09:58 AM
New research released Thursday by Prudential Financial showed that most African-Americans had a greater sense of advancement and optimism about their financial situations than the general population.
At the same time, the research found gaps in long-term retirement planning that could hinder their ability to build wealth.
The study also found strong interest among African-Americans in working with financial professionals, and ways advisors could act on this interest.
For the study, GfK in the spring polled 1,043 Americans who identified as African-American or black and 556 general population Americans, all aged 25 to 70. Among the respondents, 149 identified themselves as veterans of the U.S. military, 214 were caregivers for another person and 216 had a household income of $150,000 or more.
Fifty-six percent of African Americans surveyed said they were better off than they were five years ago, and better off than their parents were at their age.
Respondents were optimistic that financial gains would continue to build: 58% expected the next generation of their family to have a better financial situation than their own, compared with only 46% of the general population.
Fifty-two percent of African-Americans said they were very well prepared to make smart financial decisions, while only 40% of the general population described themselves that way.
However, among African-Americans who expressed high levels of confidence about their financial decision making and money management skills, 51% described themselves as savers, while just 9% said they were investors.
This indicated a need to increase knowledge of and access to investments, Prudential said.
Across the board, survey respondents most often cited having enough money to maintain their current lifestyle in retirement as a top financial priority.
Among African-Americans who said they were offered an employer-sponsored retirement plan, 74% contributed to it, a robust participation rate, but significantly lower than the 85% of general population employees who reported contributing to their company plans.
Surveyed African-Americans were also less likely to say they owned financial and insurance products, many of which could help create the retirement income they had prioritized.
Not becoming a financial burden to loved ones was a top-three priority for survey takers—an interesting priority, Prudential said, given that approximately 20% of the general population reported being a caregiver for a loved one.
Sixty-three percent of African American and 62% of general population caregiver respondents said they provided some or all financial support to those they tended to, and a quarter provided all of the support for their loved ones.
