The study from Ariel/Hewitt found that the retirement funds of African-Americans and Hispanics are being negatively impacted because these groups tend to contribute and participate in their 401(k) less than whites or Asians.
According to the report, 66 percent of African-Americans and 65 percent of Hispanics participate in company-sponsored retirement plans while 77 percent of whites and 76 percent of Asians do the same.
While these statistics will affect the various groups differently when it comes time to retire, the report finds that African-Americans and Hispanics are more likely to take a loan or hardship withdrawal on their 401(k) for potential debt help.
Almost two-fifths of African-Americans and 29 percent of Hispanics have taken a loan on their retirement account while 21 percent of whites have done the same. The number is even lower for Asians with only 16 percent borrowing on their 401(k).
While some may consider borrowing on their 401(k) for financial emergencies such as to stop foreclosure or to avoid personal loans, experts say this should be a last resort.
Barbara Hogg, principle at Hewitt Associates and co-leader of the study, said that these figures would be problematic under normal circumstances but are made even more so because of the current economic climate.
“These statistics are troubling because loans and withdrawals jeopardize long-term financial security to satisfy immediate needs,” she said. “The impact is heightened during an economic downturn, when unemployment rises and withdrawals and loan defaults increase.”
Although the 401(k) appeared to be an endangered species in the workplace, a recent study seems to suggest it will make a comeback when the economy recovers. A study last month from CFO Research Services and Charles Schwab found that 43 percent of companies that suspended 401(k) plan on reinstating them in the next 12 months.
Similar Posts:
- “Average” Americans being affected by financial problems
- Consumers should keep certain things in mind when borrowing against 401(k) to pay off debt
- Eight Do’s and Don’ts for Your 401k
- Consumers may get help with credit card debt as employers reverse salary cuts
- Elderly more likely to face debt management problems
Recent Comments