As we observe and celebrate Black History Month, a new LIMRA report suggests action items for financial professionals to help more Black Americans achieve retirement success.
The organization’s latest consumer sentiment survey finds that even though more Black Americans are optimistic about their financial future compared to past years, they continue to be concerned over their finances, and especially regarding retirement. Financial professionals can help mitigate those concerns, the report writes.
According to the report, less than four in 10 believe they have saved or are allocating enough for retirement, and less than three in 10 trust they have done enough in planning for their long-term future.
This group was also less likely to have invested in a workplace retirement account or an individual retirement account (IRA), and not as likely to believe their retirement tools will generate guaranteed income in the future.
Other financial worries include paying for medical expenses in the case of illness or an injury; being able to support themselves if they are unable to work due to an illness or disability; paying for long-term care services should they be unable to care for themselves; and burdening others with burial/funeral expenses, found LIMRA.
Despite their concerns, Black Americans were most likely out of all other races to say their personal financial situation would improve in 2024 (at 67% compared to 54%). Black Americans also tended to have a favorable opinion of the U.S. economy (37% vs. 30%) and say economic conditions would improve this year (42% vs. 37%).
Financial advisors can help participants prepare for retirement and address these fears as long as they meet them halfway, LIMRA adds. Today, 43% of Black Americans say they work with a financial advisor, but just nearly one in three express interests in working with one, potentially due to a lack of diversity in the field and historical discrimination.
In a separate LIMRA study, when asked what attributes mattered most in a financial professional, Black Americans were likelier to prioritize trustworthiness, experience, and expertise when engaging with an advisor. Thirty-six percent of Black Americans also said that working with someone who has a similar culture/ethnic background is important, compared to 25% of all consumers.
“As the U.S. celebrates Black History Month, it’s the perfect time for the industry to work to create educational tools and resources for this population while encouraging financial professionals to engage Black Americans and help them develop a holistic financial plan that will help them protect their loved ones and attain greater retirement and overall financial security,” LIMRA wrote in its report.
Part of that trust is offering relevant financial planning tools, like annuity products. According to LIMRA’s research, Black Americans were more likely than the general population to own and express interest in life insurance products, with 57% saying they need an annuity and 54% reporting owning life insurance. Seventy-two percent also say they own permanent life insurance.
Additionally, 28% of Black Americans say they would use their cash value life insurance to supplement their retirement savings and four in 10 say the cash value of their permanent life insurance will represent a significant portion of their retirement funds.
Recommending or advising such products could help fortify Black American’s retirement prospects and financial goals, says LIMRA.
Correction: A previous version of this article misstated that 54% of Black Americans owned an annuity product, when in fact it was life insurance. This has since been corrected.
SEE ALSO:
- Most Americans Saving for Retirement, But Many Don’t Know How Much They’ve Saved
- Americans Say They Won’t Have Enough Savings for Retirement
- Black and Latino Employees Experience Lower Levels of Financial Confidence: Voya
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.