A study commissioned by the ING Retirement Research Institute, called “Retirement Revealed,” examined the attitudes, behaviors and preparedness of different ethnic groups, including African-Americans, Asians and Hispanics, regarding their future retirement.
According to the study, all populations found retirement planning to be a daunting task. The study found 50% of African-Americans, 48% of white and 44% of Asian respondents feel they are not prepared for retirement.
These feelings correspond with the amount saved in employer-sponsored retirement plans, where Hispanic respondents reported having the lowest average balances ($54,000) in their retirement plans. This amount was considerably less than the average balance across all groups ($69,000). In contrast, Asian respondents reported having the highest average plan balances ($81,000).
Other key findings from the study include:
- Non-whites were more likely than whites to get their investment information and guidance from the Internet and media. African-Americans (54%), Asians (53%) and Hispanics (50%) indicated that the media and Internet were the primary source of getting advice and guidance compared to 45% of white respondents.
- Whites were more likely to use a financial professional.
- While nearly one in three (28%) of overall respondents work with a financial professional, only three-quarters (75%) of this group indicated their adviser looks at their complete financial picture.
- Face-to-face communication with a financial professional is ranked the highest in terms of value provided in getting information about their retirement plan and other employee benefits.
Barriers to Saving
Nearly three-quarters (73%) of respondents admitted to having barriers to saving. Among the groups, African-Americans said debt was their biggest barrier. Needing to know more about their savings options is a greater barrier to savings for Hispanics than for any other group.
- Hispanic respondents were less focused on their future retirement goals — well more than half (57%) have never calculated how much money they will need to continue their current lifestyle upon retirement.
- Seven in 10 (70%) Hispanics did not have a formal investment plan to reach those goals.
- Only three in 10 (29%) of overall respondents have a formal investment plan; African-Americans are most likely to have one (32%); whites are least likely (28%).
Just under half of respondents (41%) have virtually no emergency savings (one month or less). This increases to nearly half for Hispanics (47%) and 50% for African-Americans, while only one in four Asians have one month or less saved for emergencies.
Asians appear to be most prepared for retirement but had a tendency to place a higher priority on lifestyle choices—such as purchasing a nice house or car—than planning for retirement.
“There are certainly more similarities than differences among the ethnic groups when it comes to retirement planning, but distinctions do exist and understanding them can be critical to future retirement success,” said Fabian Gonzalez, vice president of Multicultural Sales at ING U.S. “For example, many times in the Hispanic community, parents will sacrifice their own financial future in order for their children to advance. By researching and learning about the rationale behind decisions like this, we can better understand our customers and help them achieve their financial goals.”
Additional findings from the study include:
- Nearly one in four African-Americans (23%) have life insurance coverage equal to four to five times their salary, higher than the total population (18%). This corresponds with African-American respondents indicating that they were the most likely to leave life insurance proceeds to their heirs (70%vs. 53% of the total sample).
- More than six in 10 African-Americans (63%) cite reducing debt as their most important short-term financial goal.
- Hispanics are the most likely (57%) to want more education about investments and retirement options from their employer, compared to all respondent groups (47%).
- Asians are the least likely to have a last will and testament (26%), compared with 31% for Hispanics and 37% for white respondents.
The report and additional information on ING’s “Retirement Revealed” study are available at http://ing.us.
Findings are from an online survey conducted by ORC International from October 5-13, 2011. Respondents were 4,050 adults (including 500 African-Americans, 500 Hispanics and 350 Asians) between the ages of 25 and 69 who are employed full-time with an annual household income of $40,000 or greater.