Prudential Financial has just released their African American Financial Experience study. This bi-annual survey of more than 1,600 American households measures the financial pulse of the Black community. The respondents were ages 25-70 with household incomes of $25,000 or more.
There is both good and bad news. “The study shows increasing economic power and an emerging middle class within the community,” said Charles Lowrey, Prudential’s chief operating officer. Unfortunately, the survey also illustrates that large consumer debt loads and insufficient retirement planning still hamper our financial success.
Some of the most intriguing points of Prudential’s study:
We’re earning more.
Approximately four in ten African Americans surveyed have an annual household income of $75,000 or more, with nearly 25% of households earning six figure incomes. About one third of the African-Americans surveyed possess more than $50,000 in financial assets like savings, investments, and 401K plans.
We’re also optimistic.
Whether due to faith, family, or our history of overcoming adversity, African Americans are financially more optimistic than their counterparts. Even during the current economic downturn, half of African Americans surveyed feel better off financially now than a year ago. And those that attend church regularly are more optimistic than those that don’t.
But debt is still a big problem in our community.
Unfortunately, 94% of African Americans have some type of significant debt compared to 82% of the general population. Credit card debt and personal loans are also higher in the African American community. College educated African Americans are handcuffed with twice as much student loan debt as their counterparts. As a result, one in four African Americans has felt anxiety or depression because of debt. Fortunately, paying down that debt remains the number one priority for African Americans.
We’re supporting a village.
The Prudential report highlights a key reason why African Americans, especially, need to be smart with our money. Simply put, we’re supporting more people with the money we make. Compared to the general population, we live in a higher percentage of multi-generational households – with parents, adult children, and grandparents all living under the same roof. Moreover, the survey found that African American families are more likely to provide support for extended family members regardless of whether they live under the same roof.
As Sharon Taylor, senior vice president and head of human resources at Prudential, summarizes:
“Family remains a key factor in the African American financial experience. African Americans also report managing more financial priorities than the general population, despite doing so with lower incomes. African Americans have a greater number of family-oriented financial priorities, like adequately protecting loved ones, leaving an inheritance and funding education.”
We may be deceiving ourselves about our retirements.
African-Americans expect to retire earlier than the general population. In fact, one in four African Americans expects to quit working before the age of 60. This is despite the fact that we generally have less retirement savings than the general population. And while eight in ten African Americans contribute to a workplace retirement plan, many contribute less than their employer match or take loans from their plan. In essence, many African Americans could be in for a rude awakening when they retire without the funds needed for a comfortable retirement.
You can see the full Prudential report here.
BMWK, do you feel better off financially now than a year ago?
like what you're reading?