While among one of the fastest growing population demographics in the country, Hispanic workers face major challenges in allocating enough towards retirement savings, studies have shown.
In a 2016 study conducted by The Urban Institute, it was reported that immigrant Hispanic retirees age 65 and older held a far less chance in being satisfied with retirement than non-Hispanic whites. Instead, Hispanic retirees were about twice as likely to be less gratified during their retirement. Furthermore, a Principal study found Hispanic workers born outside of the United States have the lowest retirement plan participation rate of all other workers, often due to language barriers and cultural influences.
Why? Well, there’s a list of factors. For starters, Carlos Rojas, director of Consumer and Cultural Engagement at Principal, believes the problem can be attributed to little knowledge in the concept of saving for retirement. “It’s not a lack of discipline, but just an understanding of the system,” he says.
While Hispanic workers may have trouble in allotting enough for retirement, Rojas explains that the issue does not lie with saving in itself. Instead, it runs on several other factors dismaying workers, including caring for family back in their native country; a distrust of politics in institutions and employers; and planning to retire in their homeland.
“There’s definitely an absence of financial literacy but not in financial discipline,” says Rojas. “Their ability to send money back home; that actually highlights the fact that they have the ability to purposely save for a reason.”
In regards to a mistrust towards employers, Rojas found that the concern narrowed down to matching contributions, where employers noticed how workers would fail to realize the amount paid by the sponsor as well.
“When we started paying attention, observing their behavior, they didn’t [realize],” he says. “They really missed it, and when we delve deep into it, they really had this distrust that comes from a very rooted concept where they would say, ‘why would my employer even care to do this for me?’”
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