Ariel and Schwab released their annual study on investing habits of Blacks, and there seems to be some bad news:
According to this year's just-released Ariel-Schwab Black Investor Survey of 500 Blacks and 500 Whites earning more than $50,000 annually, the median amount of money saved by Blacks surveyed is less than half of their White counterparts ($48,000 versus $100,000). On a monthly basis, median savings is $182 for Blacks versus $261 for Whites.
The survey was first conducted by the two companies in 1998, when 57% of Blacks and 81% of Whites said they owned individual stocks or stock mutual funds. A decade later, still just 57% of Blacks are stock investors, compared to 76% of Whites. During the past ten years, the number of Blacks who own stocks or mutual funds rose as high as 74% (in 2002) only to fall again, while White participation has consistently hovered within a few percentage points of 80%.
Lost in the headlines is this fact gleaned from the survey: A larger percentage of middle-class blacks than whites work for employers such as the government that tend to provide traditional pensions plans.
In last year's investor survey, three times as many African Americans as whites (29 percent compared with 10 percent) said they planned to start a business after they retire. Wouldn't that provide them with needed retirement income?
A higher percentage of blacks than whites own real estate other than their home (42 percent compared with 33 percent), and of these, a greater share of blacks (58 percent compared with 48 percent) say they expect these investments to help fund retirement.
When we look at these surveys, we have to ask who is paying for them. Ariel and Schwab are investment companies. Of course they want to see more people invest. That translates into more business for them.
Still, I believe the overall message from the two companies is valid. Investing is important and should be a key component of a diversified retirement portfolio. It is for me.
What concerns me is the portrayal of blacks as culturally inept at understanding the importance of building wealth for retirement. But as Ariel and Schwab write in the report, "While whites have saved considerably more than blacks, the harsh reality is they, too, are underinvested and ill-prepared for retirement."
I think her comments deserve some thought and consideration.