"People of color face particularly severe challenges in preparing for retirement," according to a new report titled, "Race and Retirement Insecurity in the United States," by the National Institute on Retirement Security (NIRS).
Although every demographic group faces significant risks, says the analysis, "Americans of color are significantly less likely than whites to have an employer-sponsored retirement plan or an individual retirement account (IRA), which substantially drives down the level of retirement savings."
In a live webinar last week, NIRS Research Manager Nari Rhee said that unless the United States addresses the paucity of retirement resources, "I think we're in real trouble."
Since the 1960s, household-income growth for African Americans has outpaced that of whites. Median adjusted household income for African Americans is now 59.2 percent that of whites, up slightly from 55.3 percent in 1967 (though in dollar terms the gap has widened).
But those gains haven't led to any narrowing of the wealth gap between the races. In fact, after adjusting for inflation, the median net worth for African-American households in 2011 ($6,446) was lower than it was in 1984 ($7,150), while white households' net worth was almost 11 percent higher. High-earning married African-American households have, on average, less wealth than low-earning married white households.
Exactly why income gains haven't translated into wealth gains for African Americans is something of a puzzle. Researchers have identified several possible factors – less intergenerational inheritance, higher unemployment and lower incomes, differing rates and patterns of homeownership, marriage and college education – without reaching any consensus on their relative importance. There is little understanding of why the black-white wealth gap exists, despite an almost embarrassing number of potential explanations."
Are you considering making the transition from the role of employee to small business owner in this evolving economy? Start by strategizing and prioritizing your financial planning responsibilities.
With the collective guidance of a qualified tax adviser and Certified Financial PlannerTM professional from the Financial Planning Association, you can assemble a well-organized system of tracking what you spend to produce income. In addition, you can sensibly save money by learning more about eligible tax deductions you should take for your self-employed business.
Apply the following pointers and perspectives to efficiently develop and manage your new business:
There is a right way and a wrong way to close, dissolve or wind down the business. Simply walking away will leave a lot of open doors that need to be closed permanently.
Although it is never pleasant to shut down, sometimes you close a door so that another may open. If the business is not working and it cannot be saved, dissolve it and regroup. Bob Johnson of BET started and closed several businesses before hitting it big and becoming a billionaire. Not bad for regrouping, huh?
The goal of closing a business systematically is to close it quickly in a cost effective manner. So, the big question is: How do we properly close a business?
In a survey of workers who participate in an employer-sponsored retirement plan, 71 percent said they wanted their employers to increase their savings rate automatically by 1 percent each year. Some plans have auto-escalation features that increase workers' contributions by a percentage point on an annual basis.
Regardless of whether you save by default or by choice, increasing your retirement contributions could make a big difference in the amount you accumulate during your working years.
Although there's nothing magical about a 1 percent annual increase, it may be a manageable way to get closer to an appropriate contribution level for your age and personal situation. Industry estimates suggest that workers need to save 13 percent to 15 percent of salary throughout their careers to fund a retirement lifestyle equivalent to their pre-retirement standards of living. People who don't start saving until later in life may have to save a higher percentage.
The fact that businesses come and go is no surprise to anyone. Taking the current economy into consideration, many businesses are suffering. As business owners, we are trained to hang in there and ride out the storm. We are taught to sacrifice and put everything into the business.
To an owner, the business is like a child that was birthed. A failing business is a painful thing to endure because it is no longer fun. Both the owner and employees dread coming to work.
Win by any means necessary is the motto for many owners. Unfortunately, the conversation involving when to shut the business down is all too rare. Few want to admit failure or defeat. They do not even want to think about closing down.
Too many times pride stands in the way of folks asking for help. But if you are a small business, asking for help is the only way to stay above the fray. One area that business owners tend to run from is tax preparation.
Whether the business is fledgling or experienced, tax preparation is always dreaded. It is a necessary evil that cannot be avoided under any circumstance.
Here's a snapshot of the tax issues that can arise and detrimentally affect a business: