African American investors are more confident in their financial futures than the average investor, and a new survey has found that slightly more than half say they are better off now than they were three years ago.
The optimism and confidence articulated by African American investors is encouraging, said Jeff Cosby, financial advisor and vice president in the Bloomington, Minn., office of Wells Fargo Advisors.
The survey found that 45 percent of African Americans who responded have cut back on their spending as a way to save money for retirement and 40 percent of that demographic, those who haven’t retired yet, have a savings plan in place. Individuals who make more than $100,000 a year are more likely to have a retirement plan in place than those who earn less.
On the flip side, African American investors are less likely to consider themselves financially comfortable, with more than one-third of non-retired African American investors reporting they are more worried about paying monthly bills than saving for retirement. Saving for retirement was the second biggest concern, followed by health care costs.
Nearly 60 percent of this demographic is more focused on reducing their debt than saving for retirement, and just over half of those surveyed are concerned they won’t have enough saved for retirement. Those under the age of 50 are more concerned than those over the age of 50.
"All investors—regardless of age or level of savings—should be focused on planning for retirement, and turning plans into actual saving and investing," said Cosby. "Many African American investors, much like the general population of overall investors, find investing in today's economy daunting."
Living in multi-generational households also has a significant impact on African American investors' savings, as a number of respondents are caring for their own children, as well as aging parents or grandparents.
One-in-five African American investors surveyed report living in three-generational households. Seventy-seven percent of African American adults surveyed who live in three-generational households are concerned they will not save enough to support themselves in retirement, compared to just 46 percent of those outside of multi-generational households.
Almost three-quarters of African American investors are optimistic about the political direction of the country, significantly higher than the general population, while 83 percent feel the U.S. economy will improve in the next two years (compared to 47 percent of the general population).
Seventy-two percent of those surveyed expect their local economy to improve in the next two years (compared to 45 percent of the overall adult population), and nearly three in four see improvements in their local housing market (71 percent, vs. 54 percent nationally).
Market Probe conducted the survey on behalf of Wells Fargo between Nov. 9-Dec. 3, 2012.