The recession has caused a greater percentage of African-American 401(k) plan participants to reduce contributions compared with white participants, according to Ariel Investments LLC's annual Black Investor Survey.
The survey of 501 blacks and 505 whites found that 27% of black participants reduced their monthly contributions, while only 16% of whites did so during the past two years, according to a news release on the survey's findings. Among non-retired participants, 22% of blacks and 14% of whites withdrew or borrowed money from their retirement accounts during that time.
“The recession exacerbates the differences” between black and white retirement-savings behavior, Mellody Hobson, president of Chicago-based Ariel, said in an interview.
The money management company has conducted the survey each year since 1998, and the results — whether in good or bad economic times — consistently show that blacks save less and invest less than whites at similar income levels.
Ms. Hobson said the survey is part of the company's education effort to encourage blacks to save more for a retirement. “We want to create a conversation so that when the next recession comes around, they'll have more of a nest egg,” she said.
However, Ms. Hobson also noted that “even in boom times, no one — blacks, whites, Hispanics — save enough.”
The median monthly contribution blacks make to their retirement plans is $230 compared with $337 by whites, according to the survey. Black participants have a median 401(k) account balance of $56,000 vs. $106,000 for whites.
The Ariel survey was based on a random sample of households earning more than $50,000 annually. The survey, conducted by Argosy Research, was administered by telephone April 7 to May 2; the margin of error is approximately 4.5%. n