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A blog about living in and planning for retirement

How Views on Retirement Differ by Race

By and large, Americans of all races face the same retirement struggles. They fear they haven’t saved enough money and worry they won’t be able to retire when they want to. More than half of all Americans think it is more challenging to save for retirement than to train for a marathon (56% vs. 44%), and more than four in ten say they aren’t prepared for retirement, according a new study by ING.

But despite a number of similarities, the study found some major differences in how races approach and think about retirement.

Planning for retirement

When asked how far their financial plans stretch into the future, Asians overwhelmingly plan for a longer period of time — often decades longer — than any other race, says Fred Mackonnen, Vice President of Multicultural Sales at ING U.S.  On the other hand, African Americans and Hispanics, on average, plan within a three-to-five-year window. Whites land somewhere in the middle, with a financial plan that stretches to the next generation, on average.

Saving for retirement

Even controlling for income levels, African Americans (33%) view debt as their biggest hindrance to investing and saving for retirement. That compares to 26% of Hispanics, 24% of Whites and 16% of Asians. Lack of knowledge about options for saving ranked higher among Hispanics (18%) and Asians (15%), than African Americans (9%) and Whites (11%).

Setting a savings rate

Another big discrepancy is how much people save in their employer-sponsored retirement plans, even controlling for income. Asians by far save more than other groups — an average of $324 per paycheck — while whites save just $226, Hispanics $183 and African Americans $154.

But no matter what the racial differences are, most Americans are unprepared for retirement, experts say.  To help reverse that trend, Mackonnen recommends that everyone “create a road map” for how they’ll achieve their retirement goals, which includes projections on how much they’ll need to save for retirement and monthly savings goals to help them get there. Experts also recommend hiring a financial adviser to assist with planning.

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    • Very great post. I simply stumbled upon your blog and wished to say that I’ve really enjoyed surfing around your weblog posts. In any case I’ll be subscribing on your feed and I’m hoping you write once more soon!

    • This article is somewhat biased. If you really think about it, this has nothing to do with race and everything to do with education level.

    • From the information I’ve seen and in my personal experience, there are large numbers of African-Americans living in broken homes–homes without two parents. Often, the mother lives with, and raises the children, while the father moves on down the road. There are many reasons for this, but this is a social and financial disaster. The current safety nets were not designed for generation to generation, cradle-to-grave support. Plus, the continual dependency on government handouts doesn’t lend itself to a mindset where a family thinks any further into the future than when the next monthly check arrives.

      If other races, including whites, continue the trend of having out-of-wedlock children, they too will see similar problems in the new future. The traditional family–despite what we keep hearing in the media–is the foundation for a strong society. More than that, an in-tact family gives us hope for the future, and instills the mindset that having a long-range financial plan is crucial.

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.

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