11th Annual Black Investor Survey Shows White Americans Have More Than Twice as Much Saved For Retirement as Blacks, but Finds Employers Well Positioned to Make a Difference

Wednesday, October 15, 2008 8:00 am PDT



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CHICAGO--(BUSINESS WIRE)--African-Americans are on equal footing with Whites when it comes to accessing and enrolling in employer-sponsored defined contribution plans, but save far less each month and have a considerably smaller nest egg than their White counterparts, according to the 11th annual Ariel/Schwab Black Investor Survey.

According to this years survey of 503 Blacks and 506 Whites with household incomes of at least $50,000, about nine in ten of both Blacks and Whites who are working have access to a defined contribution plan such as a 401(k); and of those, about 90% of each group contributes regularly. However, the median monthly amount that Blacks contribute to their 401(k) plan is $169, while Whites contribute about 50% more, or $249 each month. As a result, the median total household savings for retirement reported by Black respondents is $53,000, in contrast to Whites at $114,000.

This years survey found that for many younger African-Americans, saving for retirement is more of a dream than a priority. Although 45% of Blacks under the age of 50 (compared to 26% of Whites) say they want to retire by age 60, they are half as likely to cite retirement as their most important goal when saving and investing (after controlling for income, education, age and other key demographics). Among those older than 50, however, reality has set in: a far smaller 24% of Blacks and 9% of Whites still plan to retire by age 60.

The problem is that people dont start saving for retirement early enough, said Mellody Hobson, Ariel President. This is a lifelong task, not something you start in middle age. The earlier people understand this, the better their chances of achieving their dreams.

The survey also found that with some help from employers, all employees, but particularly African-Americans, would be likely to ramp up their monthly 401(k) savings. About two-thirds of African-Americans (compared to about a half of Whites) say they would increase contributions to their retirement plan if employers provided access to financial advisors, seminars about retirement investing, and/or education about the features of the plan.

Employees want and need help with retirement investing, and employers have an opportunity to make a real difference, said Lisa Toppin, vice president of employee development and inclusion for Charles Schwab. Imagine how helpful seminars would be, for example, for younger Black employees who have the least realistic expectations but also the best opportunity to start charting a course toward a comfortable retirement.

This years findings show that 62% of higher income Blacks own stocks or mutual funds versus 82% of Whites. Over the last 11 years, Black stock ownership has fluctuated between last years low of 57% and a high of 74% in 2002. Over the same period, White stock ownership has consistently hovered around 80%.

While overall stock ownership among Blacks is still lagging, the historical preference for real estate among Blacks is at historic lows. This year, just 39% of Blacks said real estate was the best investment overall compared to 37% of Blacks who picked stocks or mutual funds. Among Whites, just 28% chose real estate compared to 55% who chose stocks and mutual funds. In 2004, at the height of the real estate bubble, 61% of Blacks and 51% of Whites said it was the best investment overall.

Toppin added, For employers who want to make a real difference in the financial futures of their employees, todays turbulent market environment is a time to provide the information that many Americans so desperately need in order to finance their retirements.

Both Ariel and Schwab have made a major investment in financial education for youth. Charles Schwab Foundation funds Money Matters: Make it Count, an after-school financial literacy program with Boys & Girls Clubs of America, which is available through 2,500 Boys & Girls Clubs that serve teens. In the five years since its inception, approximately 120,000 teens in more than 1,000 clubs have gone through the program. Schwab also offers resources for parents and other concerned adults through its educational website, www.schwabmoneywise.com. Through Ariels foundation, the Ariel Education Initiative, the company supports the Ariel Community Academy, a Chicago public school that integrates financial literacy into the schools curriculum.

Kids who are taught about personal finance have powerful knowledge that will serve them well their whole lives. The earlier people learn about saving and investing, the better off they will be, regardless of whether they come from wealthy or impoverished backgrounds, said John W. Rogers, Jr., Chairman and CEO of Ariel Investments.

The random sample survey of 503 Black and 506 White households earning over $50,000 annually is the eleventh for Ariel-Schwab. It was administered by telephone between June 11 and July 13, 2008. The margin of error is approximately 4.5%. The survey was conducted by Argosy Research.

Ariel Investments, LLC and The Charles Schwab Corporation are separate entities, but co-sponsor the Black Investor Survey.

Ariel Investments, LLC is a Chicago-based investment management firm and mutual fund company that serves individual investors through its no-load mutual funds and manages separate accounts for institutional clients. Ariels web site is www.arielinvestments.com. Investors should consider carefully the investment objectives, risks, and charges and expenses before investing. For a current prospectus which contains this and other information about the funds offered by Ariel Investment Trust, call us at 800-292-7435 or visit our web site, arielinvestments.com. Please read the prospectus carefully before investing. Distributed by Ariel Distributors, LLC, 200 East Randolph Drive, Chicago, IL 60601. ©2008

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.3 million client brokerage accounts, 1.3 million corporate retirement plan participants, 377,000 banking accounts, and $1.4 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org) and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Schwab Institutional division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at www.schwab.com.

To download the 2008 Black Investor Survey, log onto www.arielinvestments.com or www.aboutschwab.com.

PHOTO CAPTION: Ariel Investments Chairman and CEO John W. Rogers, Jr., Ariel President Mellody Hobson, and Charles Schwab Chairman Chuck Schwab at the Ariel-Schwab Black Investor Summit in October 2007.


Charles Schwab
Lindsay Tiles, 415-667-3997
Ariel Investments, LLC
Matthew Yale, 312-726-0140

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Lisa Toppin, vice president of employee development and inclusion for Charles Schwab (Photo: Business Wire)
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Ariel Investments Chairman and CEO John W. Rogers, Jr., Ariel President Mellody Hobson, and Charles Schwab Chairman Chuck Schwab at the Ariel-Schwab Black Investor Summit in October 2007. (Photo: Business Wire)

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