MyBlack^® Wealth

More African Americans Cut 401(k) Deferrals during Downturn

Source: PlanAdvisor.com

July 21, 2010 - The latest Ariel Black Investor Survey found that African American investors were twice as likely to have cut their 401(k) contributions to survive the recession than were their white counterparts. -
An Ariel news release said 22% of non-retired blacks (compared to 14% of whites) borrowed or withdrew money from a retirement account, while 27% of black 401(k) participants (compared to 16% of whites) reduced their deferrals.

Ariel said that is particularly disturbing news for African Americans because the median amount blacks contribute to their retirement plans is $230 per month, compared to $337 a month contributed by whites. The median assets blacks have accumulated in their current retirement plans is about half the amount that whites have accumulated: $56,000 compared to $106,000, Ariel said.

The survey found more whites were hurt by the recession than blacks in two areas: 63% of whites (compared to 45% of blacks) lost money in their retirement plans, and 39% of whites (compared with 29% of blacks) lost money outside of retirement savings.

The economic downturn has also severely impacted the retirement plans of many African Americans, according to the data. In 2006, 40% of blacks planned to retire before they turned 60, compared to only 22% of whites. This year, only half as many African-Americans—21%—intend to retire before 60, compared to 14% of whites.

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