Yet LIMRA research also suggests Black Americans aren’t prepared for retirement
According to LIMRA’s most recent consumer sentiment survey, Black Americans are the most positive about both current economic conditions and the year ahead, particularly in terms of their own financial situation.
Like all Americans, saving more in 2024 is a top three financial goal for half of Black consumers. Having enough savings for emergencies and unexpected expenses are the most common reasons many Black Americans want to save more in 2024, noted by 57% of those planning to do so.
According to the 2023 Insurance Barometer study, conducted jointly by LIMRA and Life Happens, shows Black Americans are more likely than the general population to express higher financial concerns. Topping the list is having the ability to save enough for retirement. Other financial worries include paying for medical expenses in case of illness or injury; being able to support themselves if they are unable to work due to a disabling illness or injury; paying for long-term care services should they become unable to take care of themselves; and burdening others with their burial/funeral expenses.
Diving deeper into the retirement concerns the study suggests Black Americans are less likely to be prepared to achieve financial security in retirement. LIMRA research shows less than 4 in 10 Black Americans believe they have saved/are saving enough for retirement and less than 3 in 10 say they have done enough planning for retirement.
In addition, Black Americans are less likely to have invested in a workplace retirement account or an individual retirement account (IRA) than the general population. This group is also less likely to say they own products that will generate guaranteed income in retirement. Yet, while less than 1 in 5 Black Americans say they own an annuity, they are more likely to say they need an annuity, compared with the general population (57% versus 48%).
How Life Insurance May Help
Consistently, the study shows Black Americans are more likely than the general population to own life insurance (54% versus 52% in 2023) and more likely to own permanent life insurance (72% versus 65%). This may help fortify Black Americans’ retirement prospects. According to the LIMRA study, 28% of Black Americans say they would use their cash value life insurance to supplement their retirement savings and 4 in 10 say the cash value of their permanent life insurance will represent a significant portion of their retirement funds.
Preparing for retirement and addressing other financial goals is easier when working with a financial professional. Today, just 43% of Black Americans say they currently work with a financial professional but nearly 1 in 3 Black Americans say they are looking to engage one. What are the attributes that matter most to Black Americans when choosing a financial professional? A separate LIMRA study reveals Black Americans prioritize trustworthiness, experience and expertise when looking to engage a financial professional (aligning with the general population’s priorities). Cultural affinity is also important. Black Americans are the most likely to say — all other things being equal — working with someone who has a similar cultural/ethnic background is important (36% Black consumers versus 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.