AARP regularly publishes a retirement calculator, which the advocacy group for those 50 and older said can provide a personalized snapshot of what an individual’s financial future might look like.
One simply has to answer a few questions about household status, salary and retirement savings, such as an IRA or 401(k), and participants can include information about supplemental retirement income (such as a pension or Social Security), consider how long they intend to work and think about their expected lifestyle as a retiree.
The tool is designed to help potential retirees determine the amount of money they’ll need to retire “when — and how — they want.”
But for many African Americans, retirement has fast become a pie-in-the-sky dream.
One report published this month demonstrated how African Americans, Latinos and other minorities will have a more difficult time calling it quits than white Americans.
The report, published on financial website The Motley Fool, found that the troubling disparity in retirement readiness between white Americans and minorities can be explained largely by income and wealth disparities that persist throughout our lives.
“Caucasians didn’t lose as much wealth during the Great Recession and have recovered more of it, so white households now hold close to six times the wealth of African American or Hispanic households,” the authors of the report wrote.
Median earnings for white households recovered from the recession by 2016, but earning levels for both black and Hispanic households remained below 2007 levels.
Caucasians now earn close to twice as much as minority households do, according to The Motley Fool.
Additionally, the most recent MassMutual State of the American Family Study found that there are differences in retirement planning among different cultural groups. African Americans fall short in executing life-changing measures such as accumulating wealth, being better prepared for retirement and building up savings.
According to the American Family Study, 84% of African Americans believe the American dream means financial security, 78% say it’s not living paycheck to paycheck, and 77% say it’s owning a home.
However, based on the study, many African Americans don’t have tangible assets needed to make those goals happen now.
The study showed a disconnect between African Americans’ financial situations and their hope toward the future, according to Black Enterprise magazine.
Some key findings from the survey:
• Outside of retirement accounts, only 37% of African Americans own wealth-building products such as stocks and mutual funds.
• Only 35% believe they are doing a good job of preparing for retirement.
• 33% have less than one month of funds saved for a crisis and less than 25% have amassed more than six months’ worth of emergency savings.
• 58% are actively involved in educating their children on finances versus 48% of Caucasians. About 40% rely on family members for information.
“The study shows African Americans want to improve their financial situations and are hopeful about the future,” Evan Taylor, African American market director for MassMutual, told Black Enterprise. “At the same time, it sheds light on the financial struggles and inequities that the African American community continues to battle.
“Those contradictions indicate a need for greater financial education and discipline for the whole family to achieve economic success. In fact, the biggest financial regret expressed by respondents was that they wished they had started saving and investing sooner,” he said.