By Victor C. Kirk
Every now and then you read what you wrote days and sometimes weeks later and ask the question “is this the perspective I want to propagate”. When I began the quest to unravel wealth in Monroe, it became more and more obvious to me how great the wealth gap was and that there was more and more data that speaks to this disparity. The flip side is inherent in that data collected by major research and data distribution organizations I reference e.g., the Census Bureau and the Federal Reserve Board’s “Survey of Consumer Finance for it represents a “point in time” in “America” usually collected in ten-year or two-year cycles.
So, for a moment I decided to revisit the data and set parameters on what to “repeat” or “interpret”. Too often we can be absorbed by the data and miss the point – we are, if not careful, inadvertently becoming a part of the problem and less of the solution. Our perceptions are in fact shaped by the voices we absorb and what those voices say to us becomes our choice to believe and internalize who we are and the way we are, and we act accordingly. What we see and too often what others say becomes what we chose not to counter because we do not have access to or are aware of the countervailing thought.
Let me begin again by first defining what is considered “wealth”. Wealth has been defined as the difference between families’ gross assets and their liabilities. But the data also provides a roadmap for families and individuals to follow or reverse a trend we dislike. The data represents a family’s wealth “over the life cycle and across generations”. Family wealth is acquired by advancing the significant role of five major life financial decisions about money – 1) whether or not we effect inter-generational transfers, 2) our ability to access home ownership opportunities, 3) the ability of family members to access tax sheltered savings plans, 4) the individual savings we amass, and 5) investment decisions. Armed with this data we know the earnings and spending habits of the typical and average household and use this data to fuel our next steps. For example, the data reports a “typical Black family” has assets totaling $24,100 but the asset of the average Black family is $142,500. The typical Hispanic family has assets of $36,100 but the average Hispanic family assets number $165,500. The question becomes where your total assets rank within the data suggested.
We take a closer look at family wealth accumulation following the point in time life decision matrix:
1). Inter-generational transfers:
The likely process for building wealth here is via an inheritance or gift. Families provide a bequest, pay the college tuition, or provide funds for the down payment on a house. Generally, 3 percent of a family’s disposable income is dedicated to this method of wealth transfer. Ten percent of Black families provide their children with an inheritance and the median inheritance received is nearly $87,000.
2). Home ownership opportunities:
The largest component of a family wealth rests with equity in their homes and represents the wealth a family currently possess. As such, home ownership is a key component of wealth accumulation. The data suggests nearly 15 percent of Blacks under the age of 35 own a home, 50 percent of Blacks in the age range of 35 – 54 own a home, and 60 percent of those Blacks over 55 own homes. In fact, 51% of middle age Black families own their home.
3). Access to tax sheltered savings plans:
The rule of thumb is a relationship must exist between having a job and the length of stay on the job. More often than not, we are showered with data that speaks to the unemployment rate and poverty within the black community. However, another set of data exists to counter this belief or certainly add clarity. The data suggests that 44 percent of Black families have at least one retirement account. Thirty percent of Blacks under the age of 35 and slightly less than 50% of Blacks between the age of 35 – 54 have a retirement account. Eighty percent of Black families participate in employer sponsored retirement plans. In Black families, the average savings in retirement accounts is $20,000.
4). Individual savings:
A traditional belief in the creation of savings accounts is to off- set emergencies. Ninety-seven percent of Black families have liquid assets, and the typical Black family has $2000 or less in liquid savings. Fourteen percent of Black families are reported to have enough savings to cover six months of expenses. The CARES Act, however, provided cash stimulus payments and increased unemployment benefits. With such payments, “over 90 percent of all family groups could cover their expenses for six months.
5). Investment decisions
Traditionally, stocks and mutual funds, occupy this category. Just under 34 percent of Black families have any equities with such equities for the typical Black family amounting to $14, 900.
