Planning & The New Demographics

The Cut: Exploring Financial Wellness Within Diverse Populations

We are a nation almost equally split between those who are financially healthy and
 those who are struggling

We are presenting here excerpts from Prudential’s broad-reaching study on diversity and wealth: The Cut: Exploring Financial Wellness Within Diverse Populations, including its introduction by Stephen Pelletier, Pru’s EVP and CEO, U.S. Businesses. Access the complete study here.

The financial experience of Americans is as varied and diverse as the country we call
 home. While Americans from all backgrounds share common financial goals and worries—
most revolving around meeting day-to-day expenses and saving for retirement—many are 
impacted by additional factors that underlie and sometimes impede our ability to achieve 
financial security.

To better understand their challenges, and to help us develop innovative solutions that
s peak to their diverse and growing needs, Prudential surveyed more than 3,000 Americans
between the ages of 25 and 70. As reported in our 2018 Financial Wellness CensusTM, the 
data revealed a nation almost equally split between those who are financially healthy and
those who are struggling.

Striking Differences

Within those broad categories, we also found striking variations in Americans’ perceptions
of their own financial health, with fully a third believing they are either better or worse
off than they actually are. Twelve percent have a high level of financial health by
 objective measures, for example, but are nonetheless pessimistic about their finances
(“Pessimists”). Another 16% have low objective financial health, yet perceive themselves
to be in good financial shape (“Idealists”). Meanwhile, 34% are doing well and feel that 
way (“Confidents”), while 37% are not doing well financially and recognize that to be the
case (“Discouraged”).

Our newest report—The Cut—builds on those initial findings by examining in greater detail
the financial experience of six distinct population groups: women, black Americans, Asian
Americans, Latino Americans, members of the LGBTQ community, and caregivers. In this
 analysis, we sought to take the pulse of each group’s pursuit of financial security, and to
examine the impact, where relevant, that being born in America has on this status.

Diverse Experiences

The data reveal still more startling differences in our vast population. We see, for example, 
that black Americans, Asian Americans and Latino Americans are far more likely than the
general population to be providing financial support to extended family members. The
ir search also shows that more than half of women are the primary breadwinners in their
households, and that they shoulder more non-financial responsibilities than men. And, we
learn that while Latino Americans earn less, on average, than the general population, they
also tend to be more optimistic about their financial future.

Both men and women in the LGBTQ community also tend to earn less than the general 
population, according to our research, but LGBTQ women are often more confident than
LGBTQ men that they’ll meet their financial goals. Meanwhile, a quarter of Americans act
as caregivers for others while still working outside the home at levels that almost match 
those who are not caregivers. Our research suggests that many of these caregivers need
and deserve more help balancing their many responsibilities.

A Learning Opportunity

Findings like these are critically important to Prudential, where we are committed to
 helping Americans solve the financial challenges they face in a changing world. The
wealth of insights yielded by our 2018 Financial Wellness Census will continue to inform
our efforts in the months and years ahead as we work to deliver on that promise

Excerpts From ‘The Cut – Exploring Financial Wellness Within Diverse Populations’

The Asian American Cut
Asian Americans in our study had a higher average household income than the general population but were nonetheless represented across the income spectrum. The median household income for Asian Americans in our study was the highest among all race and ethnicity groups in the U.S. at $81,331, which was 19% higher than the median for non-Latinos whites. Where Asian American populations are concentrated—in the East and West Coasts—income levels are comparable to those of the general population.

Black Americans, Asian Americans and Latino Americans are far more likely than the
general population to be providing financial support to extended family members. Additionally, more than half of women are the primary breadwinners in their
households, and that they shoulder more non-financial responsibilities than men...

Forty percent of Asian Americans in our study are financially well by both objective and subjective measures (their actual financial health and how they feel about it), versus 34% of the general population. Still, one in five Asian Americans lives in a household with annual income under $30,000. In fact, Asian Americans displayed the widest income gap between top and bottom earners of any racial or ethnic group.

Household income among Asian Americans varied greatly depending upon where they were born. Seven in 10 foreign-born Asians in our study have household incomes above $50,000 per year, versus only about four in 10 U.S.-born Asians. This could be due to foreign-born Asians skewing older as well as immigration regulations favoring highly-skilled immigrants. Additionally, we found that income varied greatly depending upon their family’s country of origin.

The Black American Cut
Much has been written about the impact of income and wealth inequality on objective and subjective financial wellness, as well as its effect on economic mobility for future generations. In our analysis we take a deeper look, examining those who make both above and below $60,000 to understand groups who are economically closer to each other.

Many black Americans are optimistic about the future. Almost three-quarters of higher-income black Americans in our study—those with household incomes above $60,000 annually—are confident they’d be able to meet their financial goals. So are two-thirds of lower-income black Americans with household income below $60,000. This made them significantly more optimistic than the general population, where only about two-thirds of all higher-income and about half of lower-income members felt the same way.

However, significantly fewer higher income black Americans indicated they are actually on track to meet key financial goals. Just 39% of higher income black Americans and 29% of lower-income black Americans said they are on track to have enough money to last through retirement, for example, versus 53% of higher-income members of the general population and 30% of lower-income members.

For younger black Americans, optimism may be warranted. Prospects appear brighter for younger black Americans, based on their income levels and earning potential. Nearly half of higher-income black households surveyed are Gen X, for example, while less than one in five are Baby Boomers. Among the general population, the reverse is true: Boomers accounted for 42% of higherincome households and Millennials only 24%.

The Caregiver Cut
In our study, caregivers self-identified as those who are providing care for someone in their personal life who is elderly, has a disability, has a long-term illness, or has special needs. Providing care could include taking a dependent to the doctor, making medical decisions, or providing financial support.

Almost a quarter of American adults in our sample serve as caregivers. Twenty-four percent of survey respondents identified as caregivers, with the most common recipients of care being parents, followed in order by a spouse, a child with special needs, or a sibling or other relative. Caregivers for parents are slightly more likely to be men than women (56% versus 44%), while caregivers for children with special needs are slightly more likely to be women than men (53% versus 47%). While more men than women in the sample self-identify as caregivers for parents, this may be due to the financial component within the definition. The actual time spent per week providing care for a parent was 45% higher for women than for men (13.8 hours vs. 9.5 hours, respectively).

Family care is equivalent to a second job, but caregivers are pulled in more directions. All respondents indicated spending almost as much time in the week on their primary family responsibilities as they do at work. Caregivers for parents (30.5 hours outside of work) and for children with special needs (31.3 hours outside of work) are spending the most time on their daily responsibilities in addition to their jobs. The time actually spent on caregiving is comparable regardless of the recipient: about 12 hours for a child with special needs or spouse, 11 hours a week for parents, and nine hours for anyone else.

Read the entire report here