How Retirement Worries Differ Among Diverse Investors

The majority of Americans who identify as people of color believe they will not have enough saved for retirement, Allianz Life Insurance Co. of North America reported Monday. This includes 52% of Black Americans, 56% of Hispanics and 62% of Asian Americans.

This level of concern compares with 56% of white respondents and varies significantly among ethnicities. 

Allianz Life said these findings, along with perceived barriers to working with financial professionals, confirm the complexity of retirement planning for people of color and the nuanced approach necessary to help members of each ethnic group achieve their financial goals. 

In terms of the various risks that can derail a retirement strategy for people of color, top concerns are consistent, yet Black respondents tend to be less worried across the board, Asian Americans the most worried and Hispanic respondents falling somewhere in the middle. 

Following are the top retirement risks each group of respondents is most worried about: 

• Unaffordable health care costs: Black/African American, 55%; Hispanic, 66%; Asian/Asian American, 76%
• Rising cost of living prevents enjoying retirement: Black/African American, 54%; Hispanic, 67%; Asian/Asian American, 74%
• Rising cost of living makes necessities unaffordable: Black/African American, 55%; Hispanic, 63%; Asian/Asian American, 70%
• Unable to care for oneself: Black/African American, 47%; Hispanic, 60%; Asian/Asian American, 69%
• Running out of money before death: Black/African American, 50%; Hispanic, 64%; Asian/Asian American, 65%
• A market downturn will hurt one’s nest egg: Black/African American, 52%; Hispanic, 60%; Asian/Asian American, 66%
• Becoming a financial burden to loved ones: Black/African American, 37%; Hispanic, 52%; Asian/Asian American, 55%

“While it’s logical to assume that different ethnic groups have different priorities when planning for retirement, it’s eye-opening to see just how varied the level of their concerns are and how that perspective likely affects their approach to spending and saving,” Travis Walker, an advisor specialist at Allianz Life, said in a statement. 

“It’s important for the financial services industry to recognize these unique differences, because they illustrate why financial professionals should consider cultural dynamics” when helping people of color plan for the future.

Allianz Life conducted the 2021 Retirement Risk Readiness Study online in December among a nationally representative sample of 1,000 individuals in the U.S., 25 and older, with an annual household income of at least $50,000 if single and at least $75,000 if married or partnered, or with investable assets of $150,000. 

The study received responses from an oversample of 396 Black Americans, 386 Hispanics and 370 Asian Americans. 

Perceived Barriers to Professional Help 

Fewer respondents of color are getting professional help with their finances than their white counterparts: 38% of Black Americans, 44% of Hispanics and 36% of Asian Americans, versus 46% of white Americans. 

Allianz Life said this points to the ample opportunity for financial professionals to assist clients from diverse cultural backgrounds. However, it said advisors should take a closer look at why investors from each ethnic group may or may not get professional assistance, as the reasons vary.

Asked why they are not currently working with a financial professional, 37% of Black respondents said it was because they did not have enough money, a reason cited by only 30% of Hispanic and Asian American respondents. 

For Asian Americans in the survey, the biggest barrier is cost, with 45% saying it costs too much to work with a financial professional, compared with 27% of Black Americans and 26% of Hispanic respondents who said this. 

Hispanic respondents reported being most active in the financial planning process, with four in 10 saying they have made a formal financial plan with a financial professional, versus 32% of Black Americans and just 26% of Asian Americans.