A new study finds distinct differences among ethnicities regarding how they view their retirement risks and worries, as well as their interest in getting help from a financial professional.
According to Allianz Life’s 2021 Retirement Risk Readiness Study, the majority of Americans who identify as “BIPOC”—black, indigenous, and people of color, including Hispanic and Asian Americans)—believe they won’t have enough saved for retirement (52% black, 56% Hispanic and 62% Asian).
While this level of concern compares to that of white respondents (56%), the level of worry from each BIPOC community varies among different ethnicities. Allianz suggests that these findings, along with perceived barriers to working with financial professionals, underscore the complexity of retirement planning for BIPOC communities and the nuanced approach necessary to help each ethnic group achieve their financial goals.
As for the various risks that can upend a retirement strategy for BIPOC individuals, the survey found that the top concerns are consistent, yet black respondents, across the board, tend to be less worried, while Asian Americans appear to be the most worried, with Hispanic respondents generally falling in the middle.
According to Allianz’s findings, the top retirement risks each BIOPC community is most worried about include (% worried):
|
|
Black/African American |
Hispanic |
Asian/Asian American |
|
Health care costs will be so high you can’t afford the care you need |
55% |
66% |
76% |
|
The rising cost of living will prevent you from enjoying your retirement |
54% |
67% |
74% |
|
The cost of living will increase and you won’t be able to afford necessities |
55% |
63% |
70% |
|
You won’t be able to take care of yourself |
47% |
60% |
69% |
|
Running out of money before your die |
50% |
64% |
65% |
|
The market will take a downturn and hurt your nest egg |
52% |
60% |
66% |
|
You’ll become a financial burden to your loved ones |
37% |
52% |
55% |
“While it’s logical to assume that different ethnic groups have different priorities when planning for retirement, it’s eye-opening to see just how varied the level of their concerns are and how that perspective likely affects their approach to spending and saving,” notes Travis Walker, Advisor Specialist with Allianz Life. To that end, Walker suggests that it’s important for the financial services industry to recognize these unique differences, because they illustrate why financial professionals should consider cultural dynamics when helping BIPOC communities plan for their financial future.
Professional Help
Additional findings show that fewer BIPOC respondents are getting professional help with their finances as compared to white respondents (38% black, 44% Hispanic and 36% Asian versus 46% for white). According to Allianz, this indicates there is still ample opportunity for financial professionals to assist BIPOC clients.
However, like their worries about different retirement risks, a closer look at why each ethnic group may or may not get professional assistance is revealing, the firm notes. When asked why they are not currently working with a financial professional, nearly 4 in 10 (37%) black respondents said it was because they “don’t have enough money,” versus only 30% of Hispanic and Asian respondents. For Asian Americans, the biggest barrier was cost, with 45% indicating it “costs too much” to work with a financial professional versus 27% of black and 26% of Hispanic respondents.
Hispanic respondents report being most active in the financial planning process, with 4 in 10 indicating they have made a formal financial plan with a financial professional, versus less than a third (32%) of black and only about a quarter (26%) of Asian respondents.
“If financial professionals want to help more BIPOC communities prepare for a successful financial future, we must place more focus on understanding their unique concerns, not treating them as one homogenous group, and tailoring approaches to address how each BIPOC community thinks about retirement,” emphasizes Aimee Johnson, Allianz Life’s Vice President of Advanced Markets and Solutions. “In this way, our industry can be more effective in helping mitigate the specific risks that are causing each BIPOC community the most concern.”
The study’s findings are based on an online survey conducted in December 2020 among a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50,000+ (single) / $75,000+ (married/partnered) or investable assets of $150,000. The study included an oversample of BIPOC ethnicities.
