Engaging Hispanic Workers in Retirement Savings

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?’”

NEXT: Focusing on cultural issues

To combat these underlying issues, Rojas suggests plan sponsors should focus on the cultural needs of Hispanic workers, instead of concentrating on fixing the language barriers involved at times. Whereas bilingual representatives can play a vital role in educating workers on participation, employers need to take time to focus on the “right levels of culture towards a 401(k) education,” says Rojas. “We need to be bicultural, not bilingual. And the differentiation was that it’s not just about language, so it’s not just about me having the ability to speak the language, but it’s me as an employee, having the ability to navigate all these intricacies.”

In order to do so, Principal’s Hispanic Market Program utilizes several solutions towards culturally engaging participants, including promoting a ‘transcreate vs. translate’ ideology, focused on context in written educational materials rather than the word-for-word translation. Also built-in is incorporating simplicity in presentations and correcting misinformed mindsets, such as distrust in a bank; and more.

Sean Jordan, vice president of Participant Development at MassMutual, believes engagement—not literacy—should be the driving force in educating Hispanic workers on the benefits of retirement saving.

“We want to understand, one, the sort of behavior they need to adopt. This is half the battle. They need to understand what they need to adopt to get to a better outcome,” he says. “The other half of the battle is actually the behavior. It’s not a literacy issue, it’s actually an engagement and making it easy for people to make decisions.”

NEXT: Engaging peers

Jordan notes that while language barriers are an issue, the real conflict lies in the cultural difference between a representative and worker. In order to break down these barriers, at MassMutual, representatives who assist Hispanic employees are most of the time, Hispanic themselves. To Jordan, this allows workers to feel a better sense of comfortability and easiness.

“It helps, culturally, not just to have the language skills, but also to have the member of the culture saying, ‘hey folks, let me explain this to you in a different way, or let me represent it in a different way, than you might otherwise get.’ It’s part language, part cultural,” he says.

Currently, between 20% to 25% of MassMutual’s representatives are bilingual in English and Spanish, and with field education, there are 80 representatives total, according to Jordan. 

Furthermore, MassMutual conducts both English and Spanish educational sessions during the same meetings, where one instructor will teach material and answer questions in both languages. The company also employs in-house translators during calls between workers and representatives, instead of utilizing third-party resources.

While both Rojas and Jordan believe the services provided are crucial, it’s the lasting effect in saving that holds the highest importance.

“You want to really take advantage of the fact that someone’s motivated in that moment, and help them do it and make it easy and intuitive,” says Jordan.

“It’s very important because it links continuity, consistency, sustainable growth,” says Rojas, “versus a momentarily, or a very short nudge that may eventually not be there for a long time.”