Blacks save much less in retirement plans

Amid historic volatility on Wall Street, there is a continuing trend of black people saving and investing less than whites, according to a survey released Wednesday. The difference is attributed to various social and cultural reasons such as getting less exposure to personal finance concepts and advice.

The poll by Ariel Investments LLC and the Charles Schwab Corp. found that 62 percent of black people surveyed own stocks or mutual funds, lagging the 82 percent of white respondents who said they do.

Executives at Chicago-based Ariel Investments, an African American-owned investment management firm and mutual fund company, said black stock ownership remains a weak spot as it has been throughout the 11 years the company has been sponsoring the annual survey.

“We certainly haven't seen the kind of progress that we had hoped for,” said Mellody Hobson, Ariel's president.

One marked change: The survey has shown historically that black investors have expressed a preference for real estate investments over the stock market. This year that preference fell to a new low, with just 39 percent of black people labeling real estate the “best investment overall.” Their preference stood at 61 percent at the height of the real estate market in 2004.

Blacks are on equal footing with white people when it comes to accessing and enrolling in their employers' defined contribution plans, according to the survey, which was based on interviews with blacks and whites with household incomes of at least $50,000. About 9 in 10 of both blacks and white who are working have access to a plan such as a 401(k), and of those about 90 percent of each group contribute regularly.

But the median monthly amount that blacks contribute to their 401(k) plan is $169, compared with $249 contributed by whites. As a result, the median total household savings for retirement reported by black respondents was $53,000. White respondents had more than twice as much, at $114,000.

The results of the nationwide survey, conducted by Argosy Research, were compiled from telephone interviews with 503 blacks and 506 whites from June 11 to July 13 and carry a margin of error of about 5 percentage points.

The poll would have missed investors in many lower-income areas, since some interviews were conducted in areas with median incomes of $40,000 or more in order to bolster the African American sample.

John Rogers, chairman and chief executive of Ariel Investments, said the findings highlight the need for public schools to educate children more about investing and savings and for companies that offer retirement plans to provide more information and do more to encourage contributions.

“As I bring up this data with CFOs (chief financial officers) at corporations that I'm on the board of or companies that we invest in, no one is thinking about this problem,” he said. “It's just amazing to me that people know that race is a big issue in America but they haven't thought about how it's impacting the ability of people of color to prepare for retirement.”