African Americans Seek Education Through Employers To Help Overcome Financial Difficulties, MassMutual Study Finds

SPRINGFIELD, Mass., Oct. 25, 2017 /PRNewswire/ -- African Americans, more likely to face greater financial difficulties than other middle-income Americans, including saving for retirement, would welcome more financial education and guidance through their employers, according to a study by Massachusetts Mutual Life Insurance Co. (MassMutual).

While 63 percent of middle-income Americans overall say they feel "very" or at least "somewhat" financially secure, only 51 percent of African Americans say the same, according to the MassMutual African American Middle America Finances Study¹. The study, which surveyed 492 African Americans with annual household incomes of between $35,000 and $150,000, found that even higher earners expressed financial misgivings: 45 percent of African Americans with annual household incomes of $75,000 or more say they feel less than financially secure compared to just 28 percent of other Americans in the same income category.

"Across the board, African Americans are more likely to say they are unprepared for retirement and feel less financially secure but are more open to education and financial guidance," said Evan Taylor, head of MassMutual's African American Markets. "The findings demonstrate a real need to reach more people, make financial education and guidance more readily available, and focus on financial wellness."

Retirement
African Americans are more likely to say they are behind in saving for retirement and 41 percent of the survey respondents expressed concerns about making ends meet. Respondents indicated a greater proclivity to making withdrawals or loans from their 401(k) or other employer-sponsored retirement plan compared to the general population (24 percent vs. 14 percent, respectively). However, they are also more open to education from their employer about saving for retirement, setting financial priorities and learning about other financial products that can enhance their financial security.

Financial Difficulties
Middle-income African Americans are more likely to report difficulty managing their household's monthly finances than others, the study finds. Thirty-six percent of African Americans said they found managing finances "somewhat" or "very difficult" compared to 27 percent of the general population. Nearly half of African Americans with annual household incomes of below $45,000 find it "much more difficult" to manage their finances.

According to the study, the top financial issues facing African Americans were debt (28 percent), lack of income (23 percent) and the cost of living (18 percent), all higher than the general population. Meanwhile, African Americans were nearly half as likely to worry about the cost of health care compared to others, the study finds.

Many middle-income African Americans have low levels of savings, with three in 10 reporting less than $500 in emergency savings compared to two in 10 respondents in the general population.  Most African Americans feel they could manage a sudden expense of $500 but those who could not are more likely to use a payday loan than others, the study finds.  More than half (55 percent) say an unexpected expense of $5,000 would cause significant discomfort or they wouldn't be able to get by.  Forty-five percent of general population respondents say the same.

Middle-income African Americans are more likely to report negative repercussions stemming from financial issues, including their ability to eat healthy (42 percent), pay for a child's education (25 percent) and impact their marriage or romantic relationship (33 percent).

Knowledge vs. Education
While African Americans are less likely to say they lack the knowledge or wherewithal to manage their money, there is a high level of interest in receiving more education and information about financial planning and money management. In addition, African Americans are slightly more likely than others to agree that financial services companies want to help households like theirs. However, significantly fewer work with some type of financial professional compared to those in the general population (29 percent vs. 38 percent, respectively); half (48 percent) say they are unsure where to go for financial advice.

"The African American community is very open to education, information and advice about financial matters from their employers, financial services firms and financial professionals," Taylor said. "It's an opportunity for financial services firms, financial advisors and employers to make a difference.

About MassMutual

MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyowners. MassMutual offers a wide range of financial products and services, including life insurance, disability income insurance, long term care insurance, annuities, retirement plans and other employee benefits. For more information, visit www.massmutual.com.

¹ MassMutual African American Middle America Finances Study, https://www.massmutual.com/-/media/files/mm-2017-african-american-fin-sec-study

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SOURCE MassMutual

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