Sometimes polling data can reveal more than the numbers they supposedly project. It can be a case of anything from needing to understand the question to being naive about the answer. The latter may be the case in a new poll from Northwestern Mutual that showed African Americans (62%) more confident than the national average (52%) that they’ll be financially prepared to retire.
Chicago-based Northwestern Mutual Financial Advisor Jabari Turner told BlacFinance he has severe doubts about those numbers based on his experience with a predominantly Blac clientele.
“My overall fear is that they have a false sense of security regarding the amount of money they actually need to retire. It’s an overall lack of awareness and all the more reason they need someone like me,” he said. “It’s revealing to them to show they’ll actually need to save $4 to $6 million.”
In the same study, Americans, on average, believed they would need $1.27 million to retire comfortably, an increase from the $1.25 Northwester Mutual found last year in its annual Planning and Progress Study.
That number is a long hike from the money most Americans have saved. The Northwestern Mutual study found that the average amount adults in the U.S. have put away for retirement is $89,300.
Turner says the biggest mistake he sees from his clients is the procrastination surrounding planning for long-term savings and investments. “They wait too long to save because they think they need a substantial amount of money to start,” he said. “Doing something now is better than doing nothing at all.” He also says some clients are shortchanging their futures by exchanging financial security for their kid’s college educations. “Kids can take out loans for college, but their parents can’t take out loans for retirement.”
One of the other interesting aspects of the study showed that African American respondents have the most confidence in receiving an inheritance to support their retirement, compared to the national average. Turner says when dealing with realistic expectations for his clients, he is aware his opinions are not loved but needed.
“Hey, I’m definitely not the fun police and I have to strike a balance where if you’re prepared for the long term, you’re better off. My Mom is a retired principal and lives off her teacher’s pension. I tell my clients to take advantage of what’s available,” he said. “The real barrier is that they’re not teaching personal finance in school and I spend a lot of time walking my clients through the basics of budgeting, savings and distribution plans.”