A Path to Financial Security That Doesn’t Lead to a 401(k)

“We almost went bankrupt,” he said. “We lost almost $350,000.” To date, Mr. Napoleon has been able to replenish only a fraction of the savings he poured into the business, dealing a major setback to his long-term plan to buy property and create a stream of rental income.

“I’ve always made it my goal to be financially free,” Mr. Napoleon said. “My family is dirt poor,” he said. “Luck is what provides their stability.” It was frustrating now, he said, to realize that his credit score had sunk under the weight of the debt he accrued when his cash flow plunged. Now he effectively has to start over.

Mr. Napoleon said his family home in Brooklyn where he and his four siblings, one of whom has special needs, grew up has been in foreclosure for more than a decade. “They worked real hard as immigrant Americans to get their home,” he said. “One of my reasons for wanting to retire early is to spend time with my parents and provide something.”

A sense of obligation to provide for parents and sometimes extended families burdens the finances of many millennials with roots in immigrant communities, said Shellise Rogers, 30, who grew up in Trinidad and New York City and has gone to Score for advice. She now lives in New York and has her own business as an accountant and business coach.

“It’s more about building up for the family versus for the individual,” she said. “Definitely, as someone who’s in finance and accounting and has lots of clients of color, I notice that there’s a need for an immediate cash flow” for many people, she said. Compared with reinvesting in their business, “adding to a 401(k) doesn’t seem as fruitful.”

Mr. Duplessi said he had decided to put money in a 401(k) when he finally got the chance to open an account two years ago when he became eligible to do so through his union. But he said he’s not sure how much to trust it, since both of his parents lost money in their accounts during the financial crisis in 2008 and he was unable to make any contributions when the hotel where he worked closed during the pandemic.

Many Black and Hispanic workers don’t even have the option of opening a 401(k). Federal Reserve data shows that 68 percent of white working-age families have access to employer-sponsored defined-contribution plans such as 401(k)s compared with only 56 percent of Black workers and 44 percent of Hispanic workers who have access to such plans.

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