October 1, 2021
Saving for the Dream
What African Americans can do now to help realize their retirement goals.
As we recognize and celebrate the achievements of Black Americans, the list of milestones continues to grow. Long-standing obstacles to the American Dream continue to be overcome, providing inspiration for those who wish to shape their destinies.
Yet, for many African Americans, achieving the dream of a more secure financial future remains a challenge. To be sure, saving enough money for retirement is a chronic American struggle. According to a 2018–19 report from the Federal Reserve, a quarter of all nonretired adults in the United States have no retirement savings or pension at all, and just 36% of nonretired adults think that their retirement saving is on track.1
The Federal Reserve also reveals that the situation is even more stark for Black Americans. Just 44% of Black middle-aged families have retirement savings accounts, with Black working-age families (those under age 55) having a typical balance of about $20,000. However, 65% of White middle-aged families have retirement accounts, with White working-age families having balances of about $50,000.2
“The contributing factors are well known and equally well entrenched,” notes Tyrone Golatt, an Executive Field Vice President of Marketing with Mutual of America. “Systemic income and wealth inequality, low homeownership, low participation in employer-sponsored retirement plans and generally higher debt make it difficult to save enough for a financially secure retirement.”
The disparities, while formidable, are not insurmountable, and improving them will take a collective effort from everyone. However, on the individual level, there are steps that Black Americans—indeed, all Americans—can take to help prepare for the kind of retirement they want:
Have multiple sources of retirement income
If your company offers a retirement plan, be sure to enroll and contribute. If not—or even if so—consider a traditional or Roth IRA. Even small but regular contributions to these types of accounts have the potential to grow significantly over time. Coupled with Social Security, they can provide income to help you meet your needs in retirement.
Save while also paying off debt
It can be difficult to save for retirement with other pressing financial commitments. However, managing expenses while also saving are equally crucial steps to help you prepare for your financial future. Look for ways to cut expenses where possible, and separate short-term goals (such as paying off credit cards and other loans) and long-term goals (such as traveling during retirement).
Increase your contributions and take advantage of any company match
Many employer-sponsored retirement plans offer matching contributions. This means your employer will contribute additional amounts to your retirement plan account based on your salary contributions. If there isn’t a match, set a goal to increase your contribution amount annually, even if by just one percent.
Remember it’s never too late to save
The sooner you begin making retirement plan contributions, the more time there will be for those savings to grow over time. Regardless of your age, if you’re eligible to contribute to a retirement plan, it’s never too late to set aside as much as you’re able. And if you’re age 50 or older, you can contribute an additional $6,500 annually to an employer-sponsored retirement plan and an additional $1,000 annually to an IRA.
We’re committed to helping people pursue their retirement dreams
Tyrone Golatt is optimistic about helping workers increase their retirement savings. “My team and I are privileged to meet with people from all walks of life, helping them crystallize their thinking about retirement, understand its cost and look for ways to save more,” he says. “Every day, we strive to help build better retirements.”
To that end, your local Mutual of America representative is available to discuss your retirement savings goals and objectives, answer questions about your retirement plan and help you evaluate your retirement-readiness. You can also check out these additional tools and resources.
If you’re ready to create your own kind of history, we can help you plan for the best kind of financially secure future.
1Report on the Economic Well-Being of U.S. Households in 2018 – May 2019. “Retirement Savings.” The Federal Reserve. Jan. 27, 2020.
2Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances. “Retirement accounts and plan participation.” The Federal Reserve. Sept. 28, 2020.
