A study shows that blacks and Hispanics put less money in their 401 (k) retirement plans than whites and Asians. The study also shows that black and Hispanics borrow more from their plans. These same workers put less money in stocks and withdraw more from the fund for hardship reasons. The result is blacks and Hispanics will have less money when they retire. It shows payments to plans come from:
- 66 percent of black workers n 65 percent of Hispanic workers
- 77 percent of white workers
- 76 percent of Asians workers
Black and Hispanic workers contribute at much lower levels:
- black workers contributed 6 percent of income
- Hispanic workers, contributed 6.3 percent n white employees contributed 7.9 percent
- Asian workers contributed 9.4 percent.
Lower contribution rates means black and Hispanic workers have lower amounts in their accounts. Among employees earning between $30,000 and $60,000:
- black workers saved $21,224
- Hispanics saved $22,017
- white workers saved $35,551
- Asians saved $32,590
The differences are dramatic. Experts say minorities will retire with less security. “African-American and Hispanic workers are in danger of retiring into poverty,” one said. The study says programs need these changes:
- Show the differences among workers to highlight the gaps.
- Lower the number of defaults on loans by increasing the amount of time a departing employee has to pay off a loan.
- Young people should learn about the value of saving and investing while in school.
- Design 401(k) plans to include automatic enrollment and increases in contributions.
- Help workers manage and grow their savings.
Communicate with workers in ways that help them make decisions.