November 16, 2009
--- In a Webinar today, Mellody Hobson, president of Ariel Investments,
said 401(k) plan sponsors should pay attention to the savings
differences among minorities. ---
She asserted that if the minorities in America do continue to save at lower rates than Americans, it will be a burden on society. “This isn’t just a black or a brown issue—it is everyone’s issue.”
She cited the annual study by Ariel and Hewitt Associates, which found significant disparity in 401(k) savings rate among black and Hispanic participants when compared to their white and Asian counterparts (see “African-Americans, Hispanics Lag on Retirement Savings” and “Audio Interview with Hewitt Associates”). When looking at participants at Fortune 500 companies, the study found that blacks and Hispanics have lower participation rates, contribute less, and invest less in equities than white participants. Furthermore, a startling four in 10 black participants took out a loan from their retirement plans.
The result: Black and Hispanic participants have lower account balances—in fact, 40% lower than whites in the income bracket of $30,000 to $60,000. Even in the higher income brackets, the disparity is evident. Furthermore, Hobson pointed out that the recession could only exacerbate the data, as unemployment rates are higher in minority groups.