Link: Retirement's racial divide: Blacks less prepared
Survey shows fewer African Americans participate in 401(k) plans
The results of this study are hard to understand. With 401K contributions the company provides matching funds up to a certain level. I have always understood that I should maximize my 401k contributions to get this "free money" from the corporation.
Investor surveys and research by two large employers strongly suggest that blacks participate in retirement plans at far lower rates and are much less likely than whites to invest in the stock market. An industrywide study of 401(k) plan activity by race has never been conducted.
Labor activists have long pushed for Pension funds (defined benefit plans) over 401K (defined contribution plans) because the pensions place the onus on the corporations to pay out a certain level of benefits. This requires no particular amount of planning on the employees part. The 401k, to the consternation of the activists require the employee to do a large measure of personal planning for their own retirement. The cash balance that they accrue over the lifetime of their employment defines the amount of money they will have at retirement. The choice to contribute 3% and thus keep more money in hand at the time rather than 8% (the typical cap of employee match) will be obvious as the laws of compound interest comes to light. There is even an option to contribute more than 8%, going up to 13% using post tax money for an even greater compounding effect for your future benefit.
Sadly, the way politics go, those who are actively making the decision to direct their current money elsewhere today and later find out that they are in a shortfall for retirement will be "saved" by some government program that will save them from themselves. Maybe Hillary Clinton's $5,000 of government money per child that acts as the "matching funds" that the employers now provide will be the magical fix? We all work for the government after all.