Prudential Financial conducts an “African-American Financial Experience” survey every two years. The 2013 results reveal much hasn’t changed for the 1,153 people polled for the report. Legacies of wealth are fleeting within the black American community, since many are invested in saving for retirement, paying down debt and purchasing life insurance.
The Huffington Post reports:
While the findings compound a recent report on the role the Great Recession has played in perpetuating the wealth gap between racial groups, African Americans remain confident about their financial future, the report says, with half of African Americans saying they are doing better now financially than they were 12 months ago, a sentiment shared by only one-third of the general population.
The report’s silver lining — confidence and optimism — stands in stark contrast to debt, however, which 94 percent of African Americans said they have, compared with the general population at 82 percent. In addition, one in four African-Americans say they have felt anxiety or depression as a result of that debt.
Earlier this month, U.S. News & World Report released the results of two studies showing that while the estimated $1 trillion in student loan debt affects individuals from all walks of life, two groups experience some of the greatest repercussions of student debt — women and minorities.
According to the report, 27 percent of black bachelor’s degree holders had more than $30,500 in loans, compared with 16 percent of white bachelor’s degree holders. Those African Americans also have higher rates of unemployment, which directly impacts their repayment power.
Prudential’s findings coincide. College-educated African-Americans are twice as likely to have student loan debt, compared with all college-educated Americans, the survey states, adding that while the student debt is a sign of economic progress, it also hampers the ability to invest or save for retirement.
Other principle findings include:
- Financial decisions in African-American communities are shaped by family and faith. The survey found “African Americans are more likely to live in intergenerational and female-headed households, and to financially support family members. More regular church attendance is accompanied by greater reliance upon faith-based institutions for financial information.
- The financial industry is ill-equipped to address the needs of African-Americans. Prudential found “across income levels, African-Americans are 13 percent less likely than the general population to have received contact from a financial advisor. The majority believes that working with an advisor could help.”
- African-Americans have a growing economic power that will soon surpass Whites. More than 39 percent of African-Americans included in the survey have annual household incomes of more than $75,000. The Multicultural Economy found “African-American buying power will increase 73 percent between 2000 and 2012, which not only overtakes the 60 percent increase in Caucasian buying power, but also the 67 percent rise in total buying power of all races combined. Two factors contributing to the gains include a 61 percent increase in Black-owned businesses in the five-year period between 2002 and 2007, and 84 percent of Blacks over 25 years of age completing high school or college – a sharp increase from 66 percent in 1990.”
Prudential’s solutions for increasing long-term financial freedom for African-Americans include decreasing unemployment and assist financial institutions with providing better resources to African-American needs.