Study: Recession Tougher on Black Middle Class

(July 21) -- Middle-class black Americans dipped into their retirement accounts to stay afloat during the recession at a higher rate than their white counterparts did, broadening the "retirement gap" between whites and African-Americans, according to a new study.

Nearly half of all blacks making at least $50,000 a year dipped into savings and retirement accounts over the past two years, compared with 31 percent of whites, according to the 2010 Black Investor Survey commissioned by Ariel Investments.

Despite the financial hit, African-Americans reported being more confident about the financial future than whites. Three out of four blacks said they were "hopeful" about the economy, compared with four out of 10 whites. Similarly, just under half of whites said they were optimistic their financial situation would get better next year, compared with two-thirds of blacks.

In this May 3, 2010 photo, job seekers wait for the beginning of the National Career Fair in Fort Lauderdale, Fla.

J. Pat Carter, AP

A study commissioned by Ariel Investments reveals that close to fifty percent of blacks making at least $50,000 a year tapped into savings and retirement accounts over the past two years, compared with 31 percent of whites.

Because whites invest in stocks at a higher rate than blacks do, the survey found, 63 percent of white middle-class Americans lost value in their retirement plans and non-retirement portfolios, compared with 45 percent of blacks. Still, the African-American middle class found it harder to set money aside for retirement. Some 27 percent of blacks with 401(k) plans cut their monthly contributions, compared with 16 percent of whites.

Twenty-two percent of blacks made pre-retirement withdrawals from their retirement accounts, while only 14 percent of whites whites did the same.

The poll was conducted for Ariel, a Chicago-based investment firm, by Argosy Research. The survey included 501 blacks and 505 whites and has a margin of error of plus or minus 4.5 percent.

The survey found that 17 percent of blacks were delinquent on a loan payment, compared with 7 percent of whites. Five percent of blacks said they faced the likelihood of mortgage foreclosure, compared with 1 percent of whites.

Faced with that cash pinch, blacks were nearly twice as likely as whites to put off retirement investments, with blacks contributing a median of $230 a month, compared with $337 for whites. And the median value of assets blacks have accumulated ($56,000) is about half that of whites ($106,000).

Ariel has sponsored the survey since 1998. The firm said the current survey is the first time it has found black households reporting savings of less than $200 a month. The median monthly savings was $189, compared with $367 for whites.