How will you retire? Whites and blacks far apart on investment and retirement strategies.

Results from a recent survey found that there continues to be a gap in the retirement investment objectives and methods of high-income African Americans and whites. Looking at contributions to retirement accounts, the study found that the average monthly contribution invested into respective retirement accounts showed blacks set aside $210 per month while their white counterparts contributed $275 per month.

The 2005 Ariel Mutual Funds/Charles Schwab & Co. Inc. Black Investor Survey: Saving and Investing Among Higher Income African-American and White Americans, which polled blacks who own stocks or mutual funds and earn more than $50,000 annually, revealed that fewer blacks (45%) consider retirement their most important goal for saving, versus whites (60%). Sixteen percent of blacks surveyed said they were saving for a child's education, compared with 10% of whites.

"Most people have never invested, so they have no idea how to choose or allocate the funds in their account," says Ursula Strong, a Prudential Financial agent in Charlotte, North Carolina. "Most people are also not comfortable putting their money in an account that is not easily accessible, which is the case of 401(k)s."

The study also revealed that 36% of blacks versus 24% of whites have taken money from their accounts prior to retirement age. After controlling for age, income, and other demographic variables the data reflects that blacks are 72% more likely to withdraw money early. Early withdrawal is subject to a 10% penalty assessed to anyone who withdraws from his or her 401 (k) plan before age 59 1/2. Says Strong: "Any one who does not contribute to their company 401(k), especially one that has employer matching is missing out a huge opportunity to have a nest egg at retirement."

Goals for Saving and Investing

                                  African-American   White

For retirement                          45%           60%
To send children to college             16%           10%
To be prepared for an emergency
  or future need                        15%           12%
To obtain a better lifestyle            13%           12%
To leave money to your children
  or heirs                              11%            6%

Note: Table made from pie chart.

Retirement Plan
Contributors
in the Last year

                           African American   White

401(k)                           55%           63%
IRA                              27%           37%
403(b)                            9%            8%
Other employer sponsored
  retirement plan                18%           18%
Any retirement program           75%           81%

Note: Table made from bar graph.

Monthly Retirement Account
Contributions

                 African-American   White

More than $500         11%           26%
$351-$500              12%           11%
$201-$350              17%           19%
$101-$200              23%           18%
$51-$100               16%           10%
Less than $50           1%            2%
Nothing                14%           14%

Note: Table made from pie chart.

Early Withdrawal of Retirement Funds

Have you ever taken money out of a
retirement plan before reaching the
age of 59 1/2?

      African-American   White

Yes         36%           24%
No          64%           76%

Note: Table made from pie chart.