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Black America Web
a day ago
- Business
- Black America Web
The Retirement Gap: Why Saving For The Future Is Harder For Black Americans
Source: AndreyPopov / Getty Despite rising incomes, many Black Americans continue to face major hurdles when it comes to saving for retirement, according to the 2025 Retirement Confidence Survey by the Employee Benefit Research Institute. The survey, which included an oversample of Black workers and retirees, revealed that the racial wealth gap persists across income levels. Among households earning $75,000 or more, just 33% of Black respondents reported having at least $250,000 in savings and investments, compared to 63% of non-Black respondents. Debt is a key factor: 63% of higher-income Black households said debt was a problem, versus 45% of non-Black households at similar income levels. Nearly half of those Black respondents said debt directly impacted their ability to save or retire comfortably. Debt remains a major barrier to wealth building for Black people. For example, Black student loan borrowers are disproportionately burdened by debt, with undergraduate Black borrowers paying an average of $386 per month, according to a 2024 report by the Education Data Initiative. Housing costs further compound this disparity. A 2022 report from Housing Matters found that, on average, Black homeowners pay an additional $13,464 over the life of a mortgage. This extra cost translates to approximately $67,320 in lost retirement savings for Black households, further widening the racial wealth gap. While many Black Americans feel confident managing daily expenses, fewer feel equipped to invest or plan for the long term. Among higher earners, only 77% of Black respondents reported saving for retirement, compared to 87% of non-Black counterparts. Retirement itself looks different, too. Around 44% of Black retirees said they left the workforce earlier than planned due to health issues or disability, compared to 32% of non-Black retirees. Many also returned to work for financial reasons and were more likely to say their retirement lifestyle fell short of expectations. Access to professional financial advice remains limited among the Black community. The study found that only 31% of Black respondents currently work with a financial advisor, although nearly half said they plan to in the future. Those who do seek help often prioritize managing debt, creating wills or estate plans, and securing life insurance over traditional retirement planning. While the data is alarming, researchers behind the eye-opening study said there are ways that the financial system can help Black individuals boost their retirement savings. These include providing greater assistance in managing competing financial priorities, such as reducing debt, supporting family members, and building long-term financial security. But Black folks don't have to wait on banks or institutions to take the first step. There are countless resources available to begin the journey toward generational wealth. It starts with prioritizing financial education, learning the fundamentals of budgeting, saving, and investing, while also exploring deeper topics like credit management, compound interest, and asset allocation. Black people can tap into a wide range of tools, including online courses, books, podcasts, and community workshops tailored to financial literacy. Connecting with financial professionals and attending local seminars can also offer practical guidance. By creating a culture of financial learning at home, Black individuals and families can not only strengthen their financial knowledge but also equip the next generation with the tools to start investing early and develop healthy money habits that last a lifetime. SEE MORE: Catalyzing Wealth-Building In The Black Community The Racial Wealth Gap And Solutions To Address It SEE ALSO The Retirement Gap: Why Saving For The Future Is Harder For Black Americans was originally published on
Miami Herald
19-06-2025
- Business
- Miami Herald
Suze Orman sends surprising message on retirement, IRAs, 401(k)s
As Americans look ahead to retirement, one pressing issue often looms large: Will I have enough money to make it all work? Renowned personal finance expert and media figure Suze Orman offers clear, straightforward advice on navigating 401(k)s and Roth IRAs - tools she believes are key to a successful retirement strategy. Don't miss the move: Subscribe to TheStreet's free daily newsletter Orman strongly urges employees to take full advantage of their workplace 401(k) programs, particularly when an employer match is on the table. That match, she notes, is essentially "free money" that shouldn't go untapped. Her guidance: aim to contribute between 10% and 15% of your earnings to a 401(k), adjusting for your age and financial situation. If your plan includes a Roth 401(k), Orman says to seriously consider it, as it provides the potential for tax-free growth over time. She also highlights the power of Roth IRAs, which allow retirees to withdraw funds without facing taxes - making them a valuable piece of the retirement puzzle. Related: Jean Chatzky sends strong message to Americans on Social Security And there's one consistent theme in her messaging: start as early as you can. By doing so, you allow compound interest to work in your favor, helping you not only stay on track but possibly surpass your long-term savings goals. To Orman, retirement planning isn't merely about squirreling money away - it's about making intentional, wise investment choices that protect your wealth and help it grow. Orman calls attention to a recent report that explains a surprising outcome many people discover as they find ways to increase their retirement income beyond Social Security monthly paychecks and income from 401(k)s and IRAs. "I hope each of you does it on your terms, according to your plan," Orman wrote in a June 19 email newsletter. "But I hope your plan also considers the possibility that things don't always go according to plan." The 2025 Employee Benefit Research Institute's annual Retirement Confidence Survey highlights three ways in which well-intentioned retirement planning assumptions often don't pan out as expected. Working for pay in retirement. According to this year's findings, 75% of current workers anticipate continuing to earn income after they retire. Yet the actual numbers tell a different story - only 30% of retirees say they're currently bringing in a paycheck. Early retirement on your own terms. Roughly two out of every three individuals who said they retired sooner than they expected admitted the decision wasn't up to them. Around 30% were let go because of layoffs or company restructuring, while another 30% cited health issues or disabilities as the reason for leaving the workforce. A portion also retired early to provide care for a partner or family member in need. More on retirement: Dave Ramsey offers urgent thoughts about MedicareJean Chatzky shares major statement on Social SecurityTony Robbins has blunt words on IRAs,401(k)s Retirement as a gentle glide. Fifty percent of workers surveyed said they hope to ease into retirement by slowly cutting back on their hours instead of stepping away from full-time work all at once. But the experience of most retirees tells a different story - almost 75% said they had no such gradual shift. Instead, they stopped working suddenly, going from their last day on the job straight into full retirement practically overnight. Related: Tony Robbins sends strong message to Americans on 401(k)s, IRAs Orman encourages people to factor uncertainty into their retirement planning, especially as they calculate income they expect to receive from the 401(k) plans and IRAs they have been contributing to doing their working years. She advises people to clearly outline their expectations - when they hope to retire, how they envision that transition, and how much income they anticipate earning from paid work during retirement. Then, for each assumption, she suggests confronting the possibility that things may not unfold as imagined. She stresses that while future events such as layoffs or health issues can't be predicted or controlled, what people can do is take action now. By increasing savings today, they can create a financial cushion that offers more flexibility if life takes an unexpected turn. "It is fantastic to make plans and to work toward those plans," Orman wrote. "But the best plans are stress-tested to make sure they have a high probability of success, no matter what curveballs come your way." Related: Dave Ramsey sends strong message to Americans on Medicare The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
