James Johnson, a business professor at the University of North Carolina at Chapel Hill, remembers when his older relatives helped him out financially while he was in graduate school. With that in mind, he has tried to make sure that their needs are met, but the costs of caring for elderly loved ones continue to rise at the detriment of his own savings.
Before his mother died two months ago, Johnson gave her at least $500 per month for utilities. In addition, he paid the insurance on his parents’ cars and houses, and their taxes. One year ago, he took on his mother-in-law’s mortgage when she couldn’t sell her home. She needed the money to buy into a retirement community that cost $6,500 per month. Last week, as his family planned a Thanksgiving retreat, he offered to pay the airfare for a relative whose leukemia prevents him from traveling by car, train, or bus.
“I know I could have that money in an interest-bearing account, but I just can’t afford to do that when I have these responsibilities,†says Johnson, who has been trying to sell his mother-in-law’s house since last year. I take it very seriously because I wouldn’t be where I am if it weren’t for those people.â€
Johnson falls within a population of affluent black people who have either $250,000 or more in household income or at least $1 million in investable assets in 2007. The Northern Trust Corp. questioned members of this group about their giving habits and published their findings in a study called “Wealth in Black America,†which was released last month. The study shows that giving and wealth building, even within affluent black communities seem to be at odds with the temperament of most blacks.
The findings reveal that approximately half of affluent blacks feel a responsibility to provide financial support to family members. Additionally, participants of the study donated about $35,000 to charitable and religious organizations in 2007.
“Financial support of family members is certainly relevant to anyone, regardless of ethnicity or cultural background, but we found this to be a particular area of focus among blacks,†says Shundrawn Thomas, senior vice president and head of corporate strategy at Northern Trust. “Blacks on the whole are very charitably inclined.â€
Six in 10 affluent blacks currently provide support to parents, and two in five provide support to siblings. Long-term care or disability is the most important need affluent blacks believe will be met through their financial support of adult family members.
“I have eight people in my family who are aging between 78 and 88 years old,†says Johnson. “You never know when you pick up the phone what they are going to need. It can be $50 for gasoline or $2,000 because the phone has been turned off. I don’t know how you plan for that. A lot of it is emergency stuff and the other part is related to health crisis.â€
Younger generations, aged 18 to 42,