The financial forecast for Millennials, according to a new study released by the University of Chicago, shows grim times ahead, with few able to afford marriage, retirement or living comfortable lifestyles similar to their parents. The retirement forecast for Black millenials could prove catastrophic if better financial planning, saving and curbing unnecessary spending are not taken seriously.
According to the GenForward survey, conducted at the University of Chicago, young White and Asian adults between 18 and 34 across the U.S. were more likely than Blacks and Latinos to be employed full-time with companies offering health benefits packages geared toward financial stability.
And for those Black Millennials, living in the District, that instability may be further compromised by shifting demographics and a skyrocketing cost of living.
“It can be daunting, for sure, living in a city where between student loan repayments and living in a decent neighborhood, your check is gone,” Ward 6 resident Melisha Govann told the AFRO. “My office offers a 401(k) plan, but my participation in it – that $100 or $200 a month – is used for food, cable, and Metrorail. I cannot consider retirement when right now, I’m just trying to survive.”
Govann’s lament, sounds like an old, familiar song to certified financial planner and founder of Envision 401(k) Advisors, James Brewer. The Chicago-based Envision works with clients from diverse money backgrounds and financial understanding.
While GenForward sets a scenario wherein a 25-year-old saving $100 per month and investing it in the stock market, earning a 7 percent annual or a potential savings of $248,551 by the time they are 65, Black millennials in D.C. tend to have no retirement savings and little understanding of how to slowly carve out savings, emergency funds, or retirement plans. Brewer, however, says that at the core of creating financial security is determining a person wants to be financially independent.
“Cultural relevance says that [Black millennials] are getting bombarded with messages such as Bruno Mars’ lyric “I’m a dangerous man with some money in my pocket (keep up). But that is only temporary. To invest, you use money that could have been spent instead. Why save for a future that may take care of itself rather than enjoy it now, while I am young,” Brewer told the AFRO. “The discipline to create and stick to a budget is key. Your vision of financial freedom may not be your brothers or your sisters. Why chase theirs and not your own? I believe that knowing why you are doing this is the key.”
Kia Smallwood, a Ward 8 resident who believed she was financially stable, having saved enough money to maintain her bills for up to six months should she lose her job, said it only took one family member’s health crisis to shrink her money to near zero.
“Watching my money dwindle was painful and it made me not want to bother saving again,” Smallwood, an hourly employee with no benefits, told the AFRO. “Years of saving and spending wisely brought me back to square one, so I am not so interested in worrying about the future – thirty years down the line.”
Still, Brewer insists that in the same ways that Black parents accumulated money enough for comfortable retirement, millennials have the ability to do so as well. While it may mean taking on a roommate, trading in the car for a bicycle, or even taking a second job, financial security is possible.
“Seeing your progress towards your financial freedom should make the journey get easier as you get closer to reaching it. People do amazing things to fit into that dress or that tuxedo for that big event; approach finances the same way,” Brewer said.