“The paradise of the rich is made out of the hell of the poor.” This quote by Victor Hugo expresses the feelings of millions of Americans. This impression is particularly true for Black Americans today. With a median 2014 household income of $35,3981 , Black-American income is less than half of Asian-American household’s income of $74,297. The Hispanic-American median household is $42, 491 while White-American’s income is $60,256. The national median household income is $53,657.
Now the real bad news for Black American household income, the 2014 median household income is 13.2 percent2 lower than it was in 2000 ($40,783). Jay Harold has a post, “Black Household Incomes Below National Average,” that talks about African-American household income in more detail.
How in the world are Black Americans going to live in retirement? The United States Department of the Treasury has created a saving program3 to help increase retirement savings. Social Security income is a primary source of most Americans in retirement.
“Old age comes on suddenly, and not gradually as is thought.”
Emily Dickinson said this memorable quote and older Black Americans feel the financial pain. The official poverty rate4 in 2013 was two and a half times larger among black adults ages 65 and older (18%) than among white adults ages 65 and older (7%). This report by the Kaiser Family Foundation highlights the difficult money decisions that the elderly must make. Buy food or my diabetes or high blood pressure medications? What about the rent or the electric bill that’s due this month?
Where’s the Help?
President Obama and Congress passed a law that will save retirement savers billions of dollars. The Fiduciary Rule5 requires retirement advisors to put their clients’ needs and best interests before their own. Investopedia provides helpful insight to this law, which goes into effect on April 10, 2017. This rule is regulated by the Department of Labor (DOL), and it was enacted to prevent financial advisors from taking advantage of their clients by giving them bad retirement advice. This bad advice tends to result in the financial firm benefiting from hidden fees that are granted through the fine print.
A fiduciary relationship6 extends to every possible case in which one side places confidence in the other and such confidence is accepted; this causes dependence by the one individual and
influenced by the other. Blood relation alone does not automatically bring about a fiduciary relationship. A fiduciary relationship does not necessarily arise between parents and children or brothers and sisters.
The courts stringently examine transactions between people involved in fiduciary relationships toward one another. Particular scrutiny is placed upon any transaction by which a dominant individual obtains any advantage or profit at the expense of the party under his or her influence. Such transaction, in which Undue Influence of the fiduciary can be established, is void.
The U.S. Labor Department has developed a fact sheet that gives a detailed description7 of the Fiduciary Law. Forbes Magazine8 wrote an article describing how the Fiduciary Law will affect your retirement accounts.
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- https://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-252.pdf Table 1, Page 6
- https://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-252.pdf Page 7