African Americans demonstrate continued optimism and growing affluence but still face long-term planning challenges
Our "2015-2016 African American Financial Experience" study found that African Americans demonstrate continued optimism about their current financial situation and growing affluence. Yet gaps in long-term retirement planning, including not taking advantage of financial and investment tools, may hinder the ability to build long-term wealth. Maintaining one's lifestyle in retirement and not becoming a financial burden to others emerged as two new financial priorities. This year’s study also examined two vital subsets of the African American community: caregivers and veterans.
Continued optimismAmong those surveyed:
- Most African Americans report a greater sense of advancement and optimism about their financial situations, compared to the general population.
- More than half of African Americans surveyed say they are better off than they were five years ago and feel better off than their parents were at their age.
- There is also widespread optimism that financial gains will continue to build, with 58 percent of African Americans indicating they expect the next generation of their family will have a better financial situation than their own, compared to only 46 percent of the general population.
- Most African Americans (52 percent) feel very well prepared to make smart financial decisions, while only 40 percent of the general population describes themselves that way. However, among African Americans who express high levels of confidence about their financial decision-making and money management skills, significantly more respondents describe themselves as savers rather than investors, indicating there is a need to increase knowledge of and access to investments.
Retirement planningAcross the board, survey respondents most often cited having enough money to maintain their current lifestyle in retirement as a top financial priority. Among African Americans who are offered an employer-sponsored retirement plan, three quarters (74 percent) contribute to it. While this is a substantial majority, it is significantly lower than the 85 percent of general population who report contributing to their company plans. Additionally, surveyed African Americans were less likely to cite owning financial and insurance products, many of which could help create the retirement income they’ve prioritized.
CaregiversNot becoming a financial burden to loved ones surfaced as a top-three priority for survey takers, an interesting priority given that one in five survey participants reported being a caregiver for a loved one. Nearly two-thirds of caregiver respondents in both groups say they provide some or all financial support to those they are caring for, and a quarter provides all of the support for their loved ones. However, African American respondents report investing significantly more time in their caregiving commitments, spending on average 20.7 hours a week on caregiving tasks compared to 14.6 hours among the general population.
VeteransAlthough 71 percent of African American veterans surveyed feel very well prepared to make financial decisions and have a positive outlook on their financial situation, only 38 percent use a veteran service organization as a financial resource, and family continues to rank as a top source of financial information. This signifies that additional opportunities exist for informing veterans about the use of financial education opportunities and encouraging their participation.
About the studyThe study, conducted by GfK, is based on a spring 2015 poll of 1,043 Americans who identify as African American or Black and 556 general population Americans on a broad range of financial topics. All participants are age 25-70. Among the respondents, 149 identify themselves as veterans of the U.S. military, 214 are caregivers for another person (such as a spouse, parent, elderly or ill relative, special needs child, etc.), and 216 have a household income of $150,000 or more. The overall margin of sampling error is +/- 3% for African Americans and +/- 4% for the general population.
The Prudential Insurance Company of America, Newark, NJ