Money Matters
Seven Things You Can Do To Protect Your Identity This Holiday season
Posted on 14. Dec, 2011 by citizen in Money Matters
Before you head to the mall or hop online to make your next purchase, take a minute to review your shopping methods to make sure you aren't putting yourself at risk of identity theft.
(ARA) – Whether you’re buying a gift for someone else or buying something nice for yourself this holiday season, there are always those looking to criminally benefit from stealing your identity. As the shopping season heats up, criminals are looking to take advantage of unsuspecting consumers and businesses at every turn.
Before you head to the mall or hop online to make your next purchase, take a minute to review your shopping methods to make sure you aren’t putting yourself at risk of identity theft. Identity theft expert John Sileo and Deluxe Corporation, a leading growth engine for small businesses and financial institutions, offer the following tips to avoid becoming an identity theft victim.
1. Keep tabs on personal items at home and at the office. The technology we have at our disposal has given thieves even more ways to access our personal information. Keeping track of your wallet, credit cards and financial documents, computers, and smartphones is vital. But even intangible items like your email inbox can provide identity thieves with all of the information they need to commit identity theft. Keeping tabs on these items when you’re out and putting them in a secure location at home is more important than ever, as is signing out of your personal accounts when you are done using them.
2. Take care with debit cards and checks. Because credit cards aren’t linked directly to your account and generally allow longer periods for you to catch fraud and remedy the situation, consider leaving your debit card at home. High-security checks with visible fibers, watermarks and hologram features are a good option if you choose to pay by check. For example, many small business owners use products like Deluxe High Security Checks, which offer 22 different security features. Whether you conduct a lot of business transactions by check, or simply prefer to make purchases using your checking account, taking advantage of products with security features can help you avoid fraud.
3. Consider leaving what you don’t need at home, when heading out for a shopping trip. Taking an occasional break from your mobile devices is not only beneficial to your sanity, but also a good strategy when you go shopping. Keeping only the essentials – credit cards, driver’s license and your cell phone – in your front pockets will make it difficult for thieves to swipe anything without you noticing.
4. Avoid using public Wi-Fi for holiday shopping. Hackers may be able to tap into a public Wi-Fi connection to steal your credit card or personal information. If you’re shopping from your smartphone, turn off your wireless connection and shop on your provider’s secure mobile network. Many smartphones also have the ability to act as a wireless router for your laptop through tethering if that’s how you prefer to shop when you’re away from home. Otherwise, it’s best to wait until you get home.
5. Avoid providing your personal information over email and to social networking sites. Never make a financial transaction based solely on an item you discovered on email, a social networking site or during a phone call from a stranger. Scammers may hack into your friends’ email systems or Facebook accounts as a guise, so be wary of anything that asks for your personal information or money.
6. Monitor your accounts. Frequent monitoring can help you catch fraud before it’s too late. Consider adding text or email notifications for purchases made on your accounts for easy and instant monitoring.
7. Strengthen your passwords. Avoid using names of family members or other words that could be identifiable to thieves willing to do a little research. Mix in capital letters and numbers to create passwords that are more difficult to hack.
By making these adjustments to your shopping habits, you’ll be sure all of your purchases end up in the right hands.
These tips are brought to you by Deluxe, a growth engine for small businesses and financial institutions, and John Sileo, identity theft expert.
Back-to-School Shoppers Greeted With Shrinking Quality, Higher Prices
Posted on 13. Sep, 2011 by citizen in Money Matters
In August 2010, prime school shopping season, consumers spent a combined $7.4 billion at family clothing stores, according to the U.S. Census Bureau.
By Chris Levister
Special to the NNPA from the Blackvoicenews.com
School aged kids are preparing for their post Labor Day return to the classroom and the tell-tale signs of rising cotton prices and a sluggish economy are everywhere.
“The prices are sky high, and the quality stinks,” says Lisbeth Rose-Scott, a mother of three school children.
Tis’ the season of the back-to-school sale, second most important time on the retailer’s calendar after Christmas. Early indications are consumers aren’t buying this year’s bevy of higher priced merchandise from jeans to pencils.
With costs for consumer goods and services from apparel to food and gas on the rise parents like Rose-Scott are back-to-school shopping at thrift stores and dusting off hand-me-downs. “I buy nice clothes for the kids at the beginning of the school year and halfway through they’re already worn out. Even their corduroy’s have holes in the knees. I can’t afford to keep throwing money down the drain.”
Retail experts say manufacturers are “quietly” making clothes that are thinner and made with cheaper quality.
Parents know this season better than anyone. Back to school shopping occurs from July through Labor Day, around the start of fall semester. Advertising for this heavy shopping time started earlier, with some stores cranking out ads in mid-June, when some schools were still in session for the spring semester.
In August 2010, prime school shopping season, consumers spent a combined $7.4 billion at family clothing stores, according to the U.S. Census Bureau.
Apparel, the season’s top-selling category for school-aged children, is bracing for cotton cost inflation of as much as 20 percent, the first in at least a decade. The recent weeks’ price declines in the commodity don’t help, because stores paid for their goods about six to nine months earlier.
Retailers are raising prices on merchandise an average of 10 percent across-the-board this fall in an effort to offset their rising costs for materials and labor. But merchants are worried that cash-strapped customers, who are weighed down by economic woes, will reject price hikes.
Some merchants are using disguise tactics to get parents to open their wallets wide and leave their magnifying glass at home. For example, some are raising prices then offering the well- worn bait of buy one at the higher price and get a second one often for lesser quality. Others are luring shoppers with children’s fashion shows, and free sunglasses with purchase.
Some are using less fabric and calling it new chic. Others are adding glitter, cheap crystals, bows, stitching, fake button holes, zippers — to justify price increases. Those embellishments can add pennies to a $1 to the cost of a garment, but retailers can charge $10 more for them, said Marshal Cohen, chief industry analyst with market research firm The NPD Group.
Cohen says parents may want to ‘shop’ their kids’ closets first. “Dust off last year’s jeans, add some lace, or trendy buttons give them a good wash and you’re good to go.”
Rose-Scott spent $19.00 for a Hello Kitty tee-shirt and a pair of slightly used jeans at a San Bernardino consignment store. A year ago, she paid $21.99 for the same shirt at a department store.
Spending on clothing and school supplies for children in grades K-12 is expected to decline this back-to-school season, a National Retail Federation survey showed.
The survey showed 70 percent of respondents with school-age children said higher food and energy prices may lower their spending this summer.
About 30 percnet of consumers believe prices on new back-to-school merchandise are higher and nearly two-thirds say lower prices far above other factors, are their biggest purchase consideration, the survey showed.
The survey indicates sales are up at the nation’s dollar store chains as shoppers flock to stores for school supplies like pencils, composition books, crayons, and back packs.
Try consignment stores – prices may be 50 percent lower – and wait if you can – clearance sales begin at the end of September, says Cohen.
Rose-Scott says the higher prices mean her school aged kids won’t get everything they want this year. “It’s now all about putting food on the table and gas in the car.”
She admits despite the higher back to school prices, shrinking quality and the morbid dread with which kids claim to greet the renewal of school days, returning to the classroom is an age old reunion to which most of them look forward with anticipation.
Save Money by Installing Ceiling Fans
Posted on 02. Aug, 2011 by citizen in Money Matters
Ceiling fans are a great way to cool homes and save on energy costs.
When the mercury rises, it is hard to remain comfortable inside your home without running up a huge bill. Fortunately, the solution is much more affordable than investing in a new air conditioner or central air system. According to the American Lighting Association (ALA), installing a ceiling fan in each living space will help family members feel cooler while saving energy. And if you have not upgraded your ceiling fans in the past eight years or so, you are missing out on saving even more money as many of today’s models are more efficient than ever.
“A ceiling fan can save homeowners as much as 40 percent on their air conditioning bills by creating a breeze that makes the ambient temperature feel seven or eight degrees cooler than it actually is,” explains John Moody of ceiling fan manufacturer Fanimation. “You can set your thermostat at 80 degrees and it will feel like it is set at 72 degrees.”
How exactly does that work? “A ceiling fan cools the room by creating a ‘wind chill effect.’ It does not lower the room temperature,” Moody says. “This wind chill effect makes you feel cooler by accelerating the evaporation of perspiration on your skin. It’s the same feeling you get when you open the window in a moving car. When used in conjunction with an air conditioner, a ceiling fan can lower energy costs because you can set your air conditioner thermostat at a higher temperature.”
For large homes, installing ceiling fans in laundry rooms and closets is becoming more common, according to Bethany Pirtle of Emerson Ceiling Fans. “Master bathrooms are also a perfect place for smaller ceiling fans, because hair dryers and steam showers can make a bathroom hot and sticky. A small-span fan can quickly and efficiently add comfort,” she says.
Another factor in determining where to install a ceiling fan is the fan’s UL listing. There are three basic UL-listed ratings for indoor, damp and wet locations. Fans that are rated only for indoors should not be used outside — even if the area is mostly covered.
Check out the best ceiling fans for your home at an ALA-member showroom. To find more information and showroom locations, go to www.americanlightingassoc.com.
NewsUSA
Life Insurance: Possibilities in a New and Complex World
Posted on 02. Aug, 2011 by citizen in Money Matters
According to a recent study published by the Life Insurance and Market Research Association, last year only 44 percent of U.S. households had individual life insurance, and 30 percent of U.S. households had no coverage at all.
These statistics come at a time when using life insurance for both its protection benefit and as a way to build cash has never made more sense. Once pillars of financial stability, home equity, defined benefit plans, 401(k) matches and social security are now under threat. Under these circumstances, funding a college education, launching a new business or meeting an unexpected health emergency are daunting and cannot easily be resolved with many of yesterday’s financial solutions.
A permanent life insurance policy that is reviewed and updated on a regular basis protects more than just assets. It brings stability and can help you take advantage of so many of life’s possibilities.
If you are thinking about buying life insurance or increasing the amount of coverage you already have, here are some common misperceptions you should know:
Life insurance is a death benefit only. In addition to a death benefit, permanent life insurance offers cash value accumulation. This money can be used to cover all kinds of life expenses for you and your family, or, small business.
Buying term insurance with a minimum amount of death benefit and putting the rest of your money in other investments is the way to go. While death protection is important, permanent life insurance offers that protection and cash accumulation, thereby meeting your needs as they evolve throughout your lifetime.
Life insurance matters only when you have children. Life insurance can fulfill many different needs aside from protecting children. For instance, you can access the cash value of a permanent policy to help grow a business or fund a favorite philanthropy.
Life insurance is a monthly bill. Premium payments on a permanent life insurance policy are an investment in your future. A permanent policy is like paying yourself, as the policy accumulates cash value over time that can be used when and however needed.
For more information about all of life’s possibilities that life insurance may fulfill, please visit www.pennmutual.com.
NewsUSA
Your Mutual Fund: Understanding the Expenses
Posted on 12. Jul, 2011 by citizen in Money Matters
Chicago — U.S. investors have close to $12 trillion socked away in mutual funds, according to the Investment Company Institute. About 44 percent of U.S. households — or roughly 90 million investors — have a mutual fund investment. Despite a surge of withdrawals during the height of past market uncertainties, mutual funds clearly still remain a popular investment option for many people. If you are selecting a fund, it’s important to understand the costs of investing, which may not always be immediately apparent.
Understanding Mutual Funds
According to the Illinois CPA Society, mutual funds are essentially a pooled investment made up of the contributions of many individual investors. You buy shares in a fund and receive a return (or experience losses) based on how well the overall investment pool does in the market. The types of investment include stocks, bonds, money market, commodities or various hybrids. Funds may have a range of different purposes, including growth or income, and different levels of risk.
Considering Loads vs. No Loads
In some cases, it may be necessary to pay a commission — or a load — to buy or sell mutual fund shares. No-load funds, on the other hand, do not charge a commission. However, these funds may charge other fees or their expenses may be higher than those of a load fund with similar objectives. That’s why it’s always important to get the big picture when picking any investment
and avoid making a decision based on any one factor.
What’s the Expense Ratio?
This is an important consideration in evaluating a fund. In simple terms, the expense ratio is the cost of running the fund divided by the amount of assets in the fund. Expenses can include the fund manager’s fee and other overhead and administrative costs, such as taxes and legal and other fees. Not surprisingly, you are most likely going to want to look for a small ratio. That’s because the expenses are deducted from the total assets before they are invested. The smaller the asset amount, the lower the return the fund will get on that amount. That seemingly small loss can add up significantly over time. An average expense ratio for a mutual fund might be around 1.5 percent. For an index fund, which invests in a portfolio that mirrors a specific stock index, such as the S&P 500, the expense ratio may be significantly less — in some cases as low as about .20 percent.
Check Out Available Resources
To get a better sense of the costs of certain funds, you can turn to a fund analyzer on the site of the Financial Industry Regulatory Authority (FINRA) at http://apps.finra.org/fundanalyzer/l/fa.aspx, which analyzes over 18,000 funds, including the related fees and how they will affect your investment. In addition, the Securities and Exchange Commission (http://www.sec. gov/investor/tools/mfcc/mfcc-int.htm) also provides information
on how to calculate and consider mutual fund fees and expenses.
Find Out About Mutual Funds
To learn more about the ins and outs of mutual fund investments, visit www.360financialliteracy.org. The site also provides useful information about a wide range of other financial issues.
Privacy and Your Personal Financial Information
Posted on 12. Jul, 2011 by citizen in Money Matters
Privacy notices you receive from banks and other financial companies explain the following:
- What personal financial information the company collects.
- Whether the company intends to share your personal financial information with other companies.
- What you can do, if the company intends to share your personal financial information, to limit some of that sharing.
- How the company protects your personal financial information.
Companies involved in financial activities must send their customers privacy notices, including:
- Banks, savings and loans, and credit unions
- Insurance companies
- Securities and commodities brokerage firms
- Retailers that directly issue their own credit cards (such as department stores or gas stations)
- Mortgage brokers
- Automobile dealerships that extend or arrange financing or leasing
- Check cashers and payday lenders
- Financial advisors and credit counseling services
- Sellers of money orders or travelers checks.
Financial companies share information for many reasons: to offer you more services, to introduce new products, and to profit from the information they have about you. If you like to know about other products and services, you may want your financial company to share your personal financial information; in this case, you don’t need to respond to the privacy notice. If you prefer to limit the promotions you receive or do not want marketers and others to have your personal financial information, you must take some important steps.
First, it is important to read these privacy notices. They explain how the company handles and shares your personal financial information. Keep in mind that not all privacy notices are the same.
Federal privacy laws give you the right to stop (opt out of) some sharing of your personal financial information. These laws balance your right to privacy with financial companies’ need to provide information for normal business purposes. You have the right to opt out of some information sharing with companies that are:
- Part of the same corporate group as your financial company (or affiliates)
- Not part of the same corporate group as your financial company (or non-affiliates).
But you cannot opt out and completely stop the flow of all your personal financial information. The law permits your financial companies to share certain information about you without giving you the right to opt out. Among other things, your financial company can provide to non-affiliates:
- Information about you to firms that help promote and market the company’s own products or products offered under a joint agreement between two financial companies.
- Records of your transactions–such as your loan payments, credit card or debit card purchases, and checking and savings account statements–to firms that provide data processing and mailing services for your company.
- Information about you in response to a court order.
- Your payment history on loans and credit cards to credit bureaus.
Credit bureaus may also sell information about you to lenders and insurers who use the information to decide whether to send you unsolicited offers of credit or insurance. This is known as prescreening. You can opt out of receiving these prescreened offers by calling 1-888-567-8688.
Vincent C. Ragland is owner of PLANS. Mr. Ragland can be reached at (312) 286-6886 and by Email at vncnt599@sbcglobal.net.
Newark Mayor to Address African American Financial Professionals
Posted on 28. Jun, 2011 by citizen in Money Matters
Financial professionals play a significant role in helping individuals to achieve long-term financial security. According to a poll conducted by the Certified Financial Planner Board of Standards, 43% of Americans believe that financial planners have become more important since the financial crisis.
For the sixth consecutive year, The American College, the nation’s leading educator of financial services professionals, will host the sixth annual Conference for African American Financial Professionals in partnership with MetLife, the founding and presenting sponsor, and Northwestern Mutual, the platinum sponsor. The two-day conference will provide participants with the knowledge and tools necessary to be successful as financial representatives and advisors.
A. Booker, Mayor of Newark
Leading companies from across the financial services industry will come together to help promote the education and advancement of African American financial professionals during the event .which is scheduled for Tuesday, August 16 and Wednesday, August 17 at the Sheraton Atlanta Hotellocated on 165 Courtland Street NE in Atlanta Georgia. More than 250 African American financial professionals at all stages of their careers, representing financial companies from across the United States, will be in attendance.The Honorable Cory A. Booker, Mayor of Newark, New Jersey will present this year’s keynote address. Recently named one of “The World’s 100 Most Influential People” by TIME magazine, Mayor Booker brings his passion for social change to the podium, drawing from a deep belief in service and social justice.Also joining as a keynote speaker is Byron Pitts, CBS Chief National Correspondent and “60 Minutes” contributor. Pitts is the author of “Step Out on Nothing” an inspirational autobiography chronicling his rise from a disadvantaged youth.
One goal of the conference is to help African American Financial Professionals deepen their expertise so that they can better serve their clients. To learn more about this event contact Francine Kaar at Francine.Kaar@TheAmericanCollege.edu or 610.526.1489.
Understanding Investment Bonds
Posted on 28. Jun, 2011 by citizen in Money Matters
Investment bonds are designed to produce medium- to long-term capital growth, but can also be used to give you an income.
You pay a lump sum to a life assurance company and this is invested for you until you cash it in or die. Investment bonds are not designed to run for a specific length of time but they should be thought of as medium- to long-term investments, and you’ll often need to tie up your money for at least five years. There will usually be a charge if you cash in the bond during the first few years. The bond includes a small amount of life assurance and, on death, will pay out slightly more than the value of the fund. For most investment bonds, you take the risk of losing some money for the chance of making more than you could get from putting money in a savings account. Some investment bonds offer a guarantee that you won’t get back less than your original investment, but this will cost you more in charges.
You can usually choose from a range of funds which can invest in, for example overseas shares, fixed interest securities, property and cash. They can also offer a way of investing in funds managed by other companies, but this may lead to higher charges.
Investment risk can never be eliminated but it is possible to reduce the ups and downs of the stock market by choosing a range of funds to help you avoid putting all your eggs in one basket. This is known as Diversification. Different investment funds behave in different ways and are subject to different risks. Putting your money in a range of different investment funds can help reduce the loss, should one or more of them fall.
Think carefully about how you want to invest your money and consider taking professional advice.
The main types of charges on investment bonds include the following:
· Allocation rates – the proportion of your money used to buy units in the chosen funds. This may be more or less than 100%. For example, an allocation rate of 99% is, in effect, a 1% charge on your investment. If the allocation rate is more than 100%, this does not mean you get ‘free money’ because other charges will offset it. Over time, the way companies take their charges may have a different impact on your investment.
· Initial charges – you may also pay an initial charge which is shown as a percentage by which your investment is reduced.
· Annual charges – each year you will pay annual charges to cover ongoing costs (such as the costs of fund management and administration). The amount you pay will vary from one bond to another (and may depend on the funds you hold within the bond).
· Cash-in charges – when you decide to withdraw some, or all, of your money, you may be charged to do so (particularly if you withdraw money in the early years).
Vincent C. Ragland is owner of PLANS. Mr. Ragland can be reached at (312) 286-6886 and by Email at vncnt599@sbcglobal.net.
The above information should not be construed as financial advice and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility to invest as you see fit. For personal financial advice, please consult your financial professional.
To Be Equal
Posted on 21. Jun, 2011 by citizen in Money Matters
Marc H. Morial President of the National Urban League
by Marc H. Morial
Proposed Mortgage Qualification Rule May End Homeownership As We Know It
“A house is made of walls and beams; a home is built with love and dreams.”
Homeownership, as we know it, could be a thing of the past if a proposed Qualified Residential Mortgage Rule (QRM) takes effect. In a letter I sent last week to the heads of the six federal agencies charged with developing risk retention regulations under the Dodd-Frank Wall Street Reform Act, I pointed out that the proposed rule would be especially damaging to the home owner aspirations of minority and working class citizens. Here’s why.
The rule would require prospective borrowers to present a 20 percent down payment, spend less than 28 percent of their monthly gross income on housing and have total monthly household debt capped at less than 36 percent. Most people can’t afford to put 20 percent down. And, when coupled with an additional requirement of near pristine personal credit standards, these proposed requirements could end the standard 30-year fixed mortgage and replace it with a new class of “high risk” borrowers, formerly known as the responsible middle class borrower.
Housing industry experts agree. In April, a coalition of trade groups including the National Association of Realtors, the National Association of Homebuyers and the Mortgage Bankers Association issued a joint report, saying in part that it would take 14 years for the typical American family to save enough money for a 20 percent down payment. They added, “A 20 percent down payment requirement for the QRM means that even the most creditworthy and diligent first-time homebuyer cannot qualify for the lowest rates and safest products in the market.”
John Taylor, CEO of the National Community Reinvestment Coalition calls this a civil rights issue. He said, “What has been proposed essentially creates a separate and unequal system of finance for people of color and for blue-collar, working-class people where regardless of your creditworthiness, of whether you’re someone who has a great credit score and pays your bills on time and plays by all the rules, if you’re not well-heeled enough to come up with 20% or if your household debt to income ratios are high … you’re going to go into a separate and unequal category of financing where you’re going to have to pay more.” The National Urban League agrees.
Adding high minimum down-payment requirements will only exclude hundreds of thousands of consumers – including legions of minority renters – from homeownership. And any rule or action that further stifles an already severely depressed housing market for first-time buyers, including many minorities, will also negatively suppress the entire housing industry – realtors, builders, retailers, suppliers and many others. Clearly, what is being proposed is anti-jobs, anti-growth, and in absolute contravention of the American Dream.
The American home, by definition, reflects much more than mere property. It represents the ability to build wealth for all those with a stable income and a demonstrated history of financial responsibility. It is the foundation of family and community and represents the collective promise of the chance to build prosperity that lasts through generations.
The National Urban League believes this promise must be reaffirmed and protected in whatever form the new housing finance model ultimately takes.
Marc H. Morial is the President and CEO of the National Urban League.
Wise Investments: Financial Realities Face Black Boomers
Posted on 21. Jun, 2011 by citizen in Money Matters
By Nayita Wilson
Special to the NNPA from The Louisiana Weekly/New America Media
NEW ORLEANS—Is retirement a boom or bust proposition for African American baby boomers?
As the 78 million boomers—more than 9 million of them Black–continue to make a gradual, but highly visible exit from the workforce, data show that pre-retirement factors, such as income and planning, are key determinants of how well off they will remain financially in their later years.
Boomer and retiree Gilda Austin, of Las Vegas, Nevada, launched her retirement savings plan the day she began her education career by taking advantage of the pension plan made available to her by the Clark County Unified School District.
“As an educator, you don’t make a lot of money, especially when you’re starting out,” said Austin, who retired from the school district as an administrator in 2008. She also returned to work, this time as a teacher, to earn more before retiring for good in 2010.
“I was vested in the state, so my pension is nice,” said Austin, who left work with about 80 percent of her pre-retirement income. And, she expects her retirement income to surpass her former salary in a few years because Nevada laws guarantee cost of living raises.
How Much Is Enough for Retirement?
Financial planners typically say retirees will need replacement income of 70-80 percent to continue living as well as they did prior to exiting the workforce. Social Security replaces only about 40 percent of workplace earnings on average. Also, public employees in many states are not eligible for Social Security and must rely entirely on their employment pensions, investments, and savings.
Today, of course, educators like Austin and other public service employees are under new pressures, as many states aim to reduce their budget deficits partly by requiring workers to contribute more to their healthcare and pension funds.
Whether in public or private jobs, though, Austin encourages others to take advantage of employee incentives and remain in good jobs as long as possible. For retirement, says a recent AARP report, Black baby boomers are less likely than others to contribute to a pension plan, when one is available. (Employer-based pensions are now offered to about one in three U.S. workers.)
“If you are relying on Social Security, invest and find opportunities to make your money grow,” Austin said. “You have to set out something— even if it’s just $10 a month. You have to save something.”
For African Americans and other ethnic groups with low savings rates and a greater portion of individuals in low paying or government jobs, working longer or re-entering the workforce after initial retirement may become the norm, say experts in aging.
Data on seniors’ incomes analyzed in the federal report, “Older Americans 2010: Key Indicators of Well Being,” reveal a gaping disparity between the net worth of Black and white households for those ages 65 and older. For instance, between 1984 and 2007, the median net worth of older whites more than doubled to $280,000; whereas, the median net worth of Blacks inched up only slightly from $29,700 to $46,000.
Furthermore, a 2010 study by the Center for Economic and Policy Research in Washington, D.C., showed that among African Americans ages 58 or older continuing to work more than four in 10 have physically demanding jobs and one in three work in difficult conditions.
Because African Americans face difficulty in the labor market throughout their working lives, says a recent AARP report, “The disadvantages are just as serious for workers age 50 and older as for their younger counterparts.”
The study, 50-Plus African American Workers, cites federal labor figures for 2008 (before the recession took effect and the most recent year with available statistics) showing that while two-in-three white or Latino men continue working, significantly fewer Black males (56 percent) were on the job. The employment levels were about half for Black, white and Hispanic women, but the report, prepared for AARP by the Urban Institute, anticipates more will keep working in light of the Great Recession and growing financial needs.
Blacks Earn Less
Further, says the AARP report, Blacks tend to earn less. The median annual income of adults ages 50 to 61 was $44,000 for Blacks, $50,000 for Hispanics, and $72,300 for whites. One reason for this income disparity is that African Americans have lower marriage rates than Latinos or whites, and married couples tend to have more income.
The study also shows that although older Black workers made important income gains in the 1980s and ’90s, their average incomes dropped by 12 percent from 1999-2008, compared with three percent reductions for Hispanics, and five percent for whites.
The AARP report’s lead author, Richard W. Johnson of the Urban Institute, noted that boomers also face other retirement challenges.
For instance, reduced wage growth because of the Great Recession will probably lower future income by five percent, or about $2,500 on average annually. Lower earnings, besides affecting personal pensions and savings, will translate into diminished Social Security retirement benefits, he said.
As it is, according to the National Committee to Preserve Social Security and Medicare, seven in 10 African American elders currently rely on Social Security for at least half their income, compared to less than two-thirds of all beneficiaries. And Social Security provides almost half of Black seniors 90 percent or more of their incomes.
Even though some Blacks are earning more money, too few are executing strategies to help build wealth, such as saving, eliminating debt, increasing income streams, creating a financial plan, and building an estate for the next generation, said Horace Sinclair, a personal financial coach working with many African American families in Louisiana and Texas.
“By and far, we are lagging behind as a people because we are not putting enough money aside,” Sinclair said.
The reality becomes most apparent at death when some Black families scramble to find funds to cover funeral costs.
In other populations, buying [life] insurance is a way to build wealth for the next generation. In the event that something happens, insurance protects that goal and provides heirs with money to fulfill the goal of the benefactor,” Sinclair said. Such goals can include paying off a mortgage, paying for college or creating a stream of income for beneficiaries. In the Black community, he observed, “They sell us burial polices. They offer enough policies to bury the person, and that’s it.”
Sinclair urges African Americans worried about their retirement future to read business articles, attend financial seminars, find a financial mentor, and establish a plan that “will attract a lot of income, assets, and wealth.”
Potential Solutions
The Urban Institute’s Johnson, while allowing that individuals with lower earnings inherently have slimmer resources for retirement, stressed, “because Social Security doesn’t allow for a comfortable retirement on its own, people really need to supplement it with their own savings, but that requires a certain level of financial education.”
One approach, he said, is for employers to offer workers a program that automatically signs them up for a retirement plan to which both employers and employees contribute. Rather than agree to sign up, as mostly happens today, individuals not wishing to participate would have to opt out. Experiments with such programs have been very successful in increasing employee participation in retirement plans.
“We shouldn’t just let people make their own decisions,” Johnson said.
“It’s important that workers have clear guidance about how much they should save for investments and where they should invest.”
Sinclair believes a “massive movement” is needed to change the difficult prospects ahead for many Black retirees. “The government is not going to be able to do it because they have their hands tied with other priorities,” he added.
“It’s not hopeless,” Sinclair went on. “There are people who are fighting and advocating for our people to make it. If you are searching for something, you will find it. If you prepare yourself for change, God is already preparing someone to facilitate what you are preparing for.”
This article is adapted from a feature in the Louisiana Weekly that Nayita Wilson wrote under the MetLife Foundation Journalists in Aging Fellowship Program organized by The Gerontological Society of America and New America Media
