Survey: Race Plays a Role in Retirement Savings Behavior

African-Americans save less each month and have smaller nest eggs.


African-Americans and whites who make at least $50,000 annually are equally likely to have access to 401(k)'s and contribute regularly. But blacks save less each month and have smaller nest eggs, according to a new survey.

Blacks contribute a median amount of $169 monthly to their 401(k) plan, while whites contribute about $249, according to a telephone survey of 503 African-Americans and 506 whites with household incomes of at least $50,000. These disparities quickly compound over time. The median household savings for retirement reported by black respondents is $53,000, while whites say they have more than double that amount in $114,000.

The survey, conducted by Charles Schwab Corp. and Ariel Investments, also found that black investors are more likely to try to time the market. Over the 11 years this survey has been conducted, black stock ownership has fluctuated between a low of 57 percent last year and 74 percent in 2002, while white stock ownership has consistently hovered around 80 percent. This year, about 62 percent of blacks who earn more than $50,000 a year own stocks or mutual funds, versus 82 percent of whites with similar levels of income.

When respondents were asked, "Of the following, which would you say is your most important goal in saving or investing money?" they replied:

Most Important Goal for Saving or Investing Money

  African-American White
Retirement 41 55
Kid's college 15 11
Emergency fund 18 14
A better lifestyle 16 10
Leave money to heirs 9 8

Source: Charles Schwab Corp. and Ariel Investments, 2008

It appears that African-American investors who save a portion of their paycheck are slightly more concerned than whites with immediate expenses, such as a college education for their children or a better lifestyle. But significant percentages of both groups are prioritizing the final destination: retirement.