Minorities close the retirement savings gap
Conversations about money can lead to greater peace of mind
It was the news that changed Derrick Harding’s perspective on financial planning forever.
In 2014, Harding, a 70- year- old African-American retiree in Miami, was diagnosed with leukemia. Then he suffered a brain aneurysm and a severed artery during his hospitalization.
“Luckily, I had insurance to cover the expenses, but it showed me that life can change in an instant and you have to be financially prepared,” he says.
It also taught Harding a lesson about the importance of talking about money with your family.
“Prior to the diagnosis, I had brief chats with my family about the importance of saving early and the dangers of overspending,” Harding says. Now, he has regular check- ins with his wife and three sons and financial planning meetings with family members twice a year.
Harding is not alone in his quest to make financial planning conversations a priority among family members. Ac- cording to an Ipsos/ USA TODAY survey of 1,250 adults ages 45 to 65 conducted in mid- January, some minorities say they are actively discussing retirement planning with their families more than their white counterparts.
In fact, 50% of Hispanics and 43% of African Americans polled report talking to their families about retirement planning compared with 40% of whites.
“It’s the evolution of time, education, opportunities and access to information,” says Ivory Johnson, CFP, founder of Delancey Wealth Management in Washington, D. C. “Information levels the playing field.”
There’s more to the story. While some minority families are talking about financial planning more often, others are still trying to jump- start the dialogue.
In the Indian community, for example, retirement planning conversations take place early and often. “The mindset is very different when it comes to money in the Indian family household,” says Divam N. Mehta, CFP, founder of Mehta Financial Group in Glen Allen, Va. Often, immigrants leave their homeland to succeed in the U. S., both for themselves and future generations.
“From a young age, most parents are actively educating their children on the importance of money management with an emphasis on savings,” Mehta says.
Deborah Herrand, a 42- year- old Hispanic teacher and single mother in Queens, N. Y., says it’s imperative to have these talks with your family.
“Financial security gives you peace of mind. I am already having conversations with my young son about setting goals and making sacrifices to achieve his dreams,” she says. Despite giving her son money management tips, Herrand admits it’s still difficult to talk to her parents and siblings.
According to figures from the 2013 Federal Reserve Board’s Survey of Consumer Finances, in 2013, white households saved a median amount of $ 76,300 in retirement accounts, compared to a median amount of $ 23,200 in non- white households.
In African- American families, younger generations are having more money conversations.
“You mention the importance of having good credit to college kids, and they respond, ‘ of course I have to have good credit,’ ” Johnson says. “Whereas my generation was talking about ‘ How can I make more money?’ the younger generation is asking, ‘ How can I build more wealth?’ ”
More minority families are talking about financial planning.