A Black and White Difference in Saving for Retirement

A survey released on Thursday by investment firms Ariel Mutual Funds and Charles Schwab showed  African-Americans are saving less for retirement than whites, and the discrepancy could seriously affect their ability to support themselves as they get older.

The survey found average savings for an African-American making $50,000 a year was $48,000, compared with $100,000 for whites in the same bracket. Most blacks preferred not to invest in stock but in real estate, figuring the risks outweighed the rewards. 

The survey also found Americans in general aren’t saving as much as they should be, but the differences between the saving practices of blacks and whites are so stark that John Rogers, founder of Ariel Capital Management, told Chicago Tribune columnist Gail MarksJarvis: “both whites and African-Americans are failing to save enough, but if Americans have a cold, African-Americans have pneumonia. “

Some key findings of the Ariel-Schwab Black Investor Survey:

• On a monthly basis, median savings is $182 for Blacks versus $261 for Whites.
• Just 57% of Blacks are stock investors, compared to 76% of Whites.
• Retired Blacks have median savings of just $73,000 compared to $210,000 for Whites.
• Blacks, on average, also retired earlier than Whites (59 vs. 61) and are more likely to be relying on a pension or Social Security rather than a defined contribution plan, such as a 401(k) plan.