Nearly 60 percent of adult Americans do not have an IRA or other investment products, like stocks, bonds, and mutual funds, and many don't have life insurance, according to a new survey conducted by the Coalition for Financial Security (CFS) and the League of United Latin American Citizens (LULAC).
The survey revealed a savings gap and a knowledge gap. Many Americans do not utilize financial tools to help them save for the future. Over 7 in 10 Americans earning less than $75,000 annually have never owned investment products (71%) or an IRA (71%), and only 54% have ever had life insurance.
This savings gap is due in part to a knowledge gap: the vast majority of Americans without investment and insurance tools do not know enough about them or do not know how to acquire them, and do not have contact with professionals who have this information.
"After Katrina, it became clear that we needed a closer look at the financial security of our families. Now we know there is a stunning savings and knowledge gap that threatens the American family's economic foundation in the event of a disaster, death or other unexpected crisis," said Jack Kemp, former Secretary of the U.S. Department of Housing and Urban Development and an Advisory Board member for CFS.
Kemp is joined on the CFS Advisory Board by former New York City Mayor David Dinkins and Raul Yzaguirre, former President and CEO of the National Council of La Raza. CFS was organized after Hurricane Katrina to highlight financial security issues. LULAC is also a member of the coalition and a partner in the survey released today.
"In addition to the savings gap, there is a knowledge gap that extends beyond a lack of financial literacy," said Yzaguirre. "This survey shows that many Americans without investment and insurance tools have never been contacted about them and do not know the professionals who can help them build a stronger financial foundation."
Evidence of the knowledge gap includes:
* 89% of Americans without life insurance do not know anyone who sells it, and 80% have never been contacted about it
* Among Americans without an IRA, 85% do not know anyone who sells them and 88% have never been contacted about them
* 90% of adults who do not own investment products like stocks, bonds, or mutual funds do not know anyone who sells them, and 86% have never been contacted about them
The survey shows that these savings and knowledge gaps are even wider among minorities. African Americans are half as likely as white respondents to own an IRA or other investment products: nearly 40 percent of white adults own an IRA or other investment products, while just 20 percent of African Americans and 27 percent of Hispanics utilize an IRA and 26 percent of African Americans and Hispanics use investment products. Two-thirds of whites have life insurance compared to roughly half of African American and Hispanic respondents.
"Improving the economic stability of America's families must include a serious discussion about the disparities among people of color and any barriers to achieving financial security," said Gabriela D. Lemus, LULAC's Director of Policy and Legislation. Added Dinkins: "What's clear is that millions of Americans have put off serious discussions about their families' financial health and their futures. Our job is to not only raise awareness but to help policy makers understand that building a strong financial foundation for your family starts with more Americans having contact with these products and the necessary financial education."
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