Study: Cultural Influences Impact Retirement Planning

Windsor, Conn. — Feb. 2

ING U.S. released findings from a study commissioned by the ING Retirement Research Institute that examined the attitudes, behaviors and preparedness of different ethnic groups, including African-Americans, Asians and Hispanics, regarding their future retirement. The research showed that while Americans of all backgrounds encounter similar barriers to saving and planning, cultural differences account for disparate experiences among the groups.

According to the study, “Retirement Revealed,” all populations found retirement planning to be daunting. However, ING’s research showed that Hispanics feel the least prepared, with 54 percent indicating they feel “not very” or “not at all” prepared. This compares with 50 percent of African-Americans, 48 percent of white and 44 percent of Asian respondents indicating they don’t feel prepared.

These feelings correspond with the amount saved in employer-sponsored retirement plans, where Hispanic respondents reported having the lowest average balances ($54,000) in their retirement plans. This amount was considerably less than the average balance across all groups ($69,000). In contrast, Asian respondents reported having the highest average plan balances ($81,000).

Other key findings from the study include:

Non-whites were more likely than whites to get their investment information and guidance from the Internet and media. African-Americans (54 percent), Asians (53 percent) and Hispanics (50 percent) indicated that the media and Internet were the primary source of getting advice and guidance, compared to 45 percent of white respondents.

While nearly one-in-three (28 percent) of overall respondents are working with a financial professional, only three-quarters (75 percent) of this group indicated their adviser looks at their complete financial picture.

Face-to-face communication with a financial professional is ranked the highest in terms of value provided in getting information about their retirement plan and other employee benefits.

Nearly three-quarters (73 percent) of respondents admitted to having barriers to saving. Among the groups, African-Americans said debt was their biggest barrier. Needing to know more about their savings options is a greater barrier to savings for Hispanics than for any other group.

Hispanic respondents were less focused on their future retirement goals — well more than half (57 percent) have never calculated how much money they will need to continue their current lifestyle upon retirement.

Seventy percent of Hispanics did not have a formal investment plan to reach those goals.

Only 29 percent of overall respondents have a formal investment plan; African-Americans are most likely to have one (32 percent); whites are least likely (28 percent).

Just under half (41 percent) have virtually no emergency savings (one month or less). This increases to nearly half for Hispanics (47 percent) and 50 percent for African-Americans, while only one-in-four Asians have one month or less saved for emergencies.

Asians appear to be most prepared for retirement, but had a tendency to place a higher priority on lifestyle choices, such as purchasing a nice house or car, than planning for retirement.

Additional findings include:

Nearly one-in-four African-Americans (23 percent) have life insurance coverage equal to four to five times their salary, higher than the total population (18 percent). This corresponds with African-American respondents indicating they were the most likely to leave life insurance proceeds to their heirs (70 percent vs. 53 percent of the total sample).

More than 63 percent of African-Americans cite reducing debt as their most important short-term financial goal.

Hispanics are the most likely (57 percent) to want more education about investments and retirement options from their employer, compared to all respondent groups (47 percent).

Asians are the least likely to have a last will and testament (26 percent), compared with 31 percent for Hispanics and 37 percent for white respondents.

Source: ING U.S.