Study sheds light on ‘one-size-fits-all’ retirement planning problem
LONDON: An insurance funded study sheds light on “the one size fits all” retirement planning approach.
The majority of veterans who identify as BIPOC (Black, Indigenous, and People of Color, including Hispanic and Asian/Asian Americans) believe they won’t have enough saved for retirement (52% Black/African American; 56% Hispanic; 62% Asian/Asian American), according to the 2021 Retirement Risk Readiness Study* from Allianz Life Insurance Company of North America (Allianz Life). While this level of concern compares to that of white respondents (56%), the level of worry from each BIPOC community varies significantly among different ethnicities. These findings, along with perceived barriers to working with financial professionals, confirm the complexity of retirement planning for BIPOC communities and the nuanced approach necessary to help each ethnic group achieve their financial goals.
In terms of the various risks that can derail a retirement strategy for BIPOC individuals, top concerns are consistent, yet Black/African American respondents tend to be less worried across the board, with Asian/Asian Americans the most worried and Hispanic respondents falling somewhere in the middle. The top retirement risks each BIPOC community is most worried about include (% worried):
|
|
Black/African |
Hispanic |
Asian/Asian |
|
Healthcare 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% |
|
That 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,” said Travis Walker, Advisor Specialist, Allianz Life. “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.”
Perceived barriers to professional help
Fewer BIPOC respondents are getting professional help with their finances than white Americans (38% Black/African American; 44% Hispanic; 36% Asian/Asian American; versus 46% white), which indicates there is still ample opportunity for financial professionals to assist BIPOC clients. However, much like their worries about different retirement risks, a closer look at why each ethnic group may or may not get professional assistance is revealing.
When asked why they are not currently working with a financial professional, more than one-third (37%) of Black/African American respondents said it was because they “don’t have enough money,” versus only 30% of Hispanic and Asian/Asian American respondents. For Asian/Asian Americans, the biggest barrier was cost, with 45% indicating it “costs too much” to work with a financial professional versus 27% of Black/African American and 26% of Hispanic respondents.
Hispanic respondents report being most active in the financial planning process, with four in 10 indicating they have made a formal financial plan with a financial professional, versus less than one-third (32%) of Black/African Americans and only about a quarter (26%) of Asian/Asian American 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,” said Aimee Johnson, vice president of Advanced Markets and Solutions, Allianz Life. “In this way, our industry can be more effective in helping mitigate the specific risks that are causing each BIPOC community the most concern.”
*Allianz Life conducted an online survey, the 2021 Retirement Risk Readiness Study, in December 2020 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.
The study included an oversample of the following BIPOC ethnicities: Black/African American: 396 responses; Hispanic: 386 responses; Asian/Asian American: 370 responses.
