Researchers at the University of Notre Dame, in a study funded by the National Endowment for Financial Education say Latinas—Hispanic women—have a huge appetite for financial education and a strong desire to save, and their savings could provide a critical safety net to America’s largest minority group.

In focus group discussions about defined contribution (DC) and individual retirement account (IRA) savings plans, study participants expressed a combination of ignorance, confusion and skepticism of the current retirement savings options. Especially in the wake of the financial crisis, economic recession and home foreclosure catastrophe, they seemed to be alienated by the plans’ obscure rules, impersonal structure and overabundance of information, categories and names. As for individual retirement plans, many of the participants did not know what an IRA was, and when researchers explained it, they expressed the same hesitation as they did with defined contribution plans.

According to the research report, the potential advantage of a tax deduction, an important element in the invention of the DC plans, did not attract them. Tax deductions do not substantially help lower-income individuals, the researchers claimed.

However, they stressed that it would be misleading for observers to infer that Latinos do not want to save for retirement. Analysis of quantitative data presented in the study indicates that native-born Latinas, even more so, are embracing opportunities to contribute to retirement plans at work. Latinas are 39% more likely to have employment-based retirement savings accounts than Latinos—Hispanic men. The more rooted they are in the United States, the less Latinos expect their children to support them in their old age. They believe that they have to establish their own secure retirements.

Why Latinos—especially Latino women—are not saving for retirement

However, analysis of data from the 2008 Survey of Income and Program Participation shows that the average retirement account balances, including 401(k) and IRAs, for Latinas ages 25 to 64 are only $5,892, far less than Latino men and all other demographics, according to the report. The causes of Latinas’ lower retirement savings include lower earnings, shorter working tenure, lower pension participation and account depletion.

First, researchers note, earnings strongly determine one’s ability to save for retirement and women workers in the United States earn far less than their male counterparts—only 78 cents for every dollar earned by men, but for Latinas, only 54 cents for every dollar white men earn. The second cause of Latinos’ lower retirement savings has to do with employer-based retirement savings plans. Workers may not be covered in an employer pension plan for three main reasons: their employer does not offer a pension; they are not eligible to participate in the plan offered at work and/or they voluntarily choose not to participate in their employer’s plan. According to the researchers, these reasons are particularly important in explaining Latinos’ weak connection to the U.S. employer-sponsored pension system, because Latinos are more exposed to all three reasons for non-coverage.

Latino workers are more likely than other groups to choose not to take advantage of the retirement savings program at work, the study found. Involuntary reasons concern eligibility—ineligible workers are those who work part-time, work less than one year, are younger than 21 years of age or are in certain jobs. The primary voluntary reasons for declining to participate concern affordability and liquidity—31% of Latino women think it is too expensive to participate compared to 37% of Latino men, 37% of black women, 23% of white women and 19% of Asian women. Thirteen percent of Latino women responded that they “don’t want to tie up money” in the plan, compared to 20% of Latino men, 6% of black women, 10% of white women and 8% of Asian women.

The study shows Mexican-heritage participants have a clear understanding of what they need to empower themselves to save for retirement. When queried for their ideas about a solution to the retirement savings conundrum, participants do not expect large institutions to help them, least of all the government. Rather, participants describe their vision of a simple, potential solution: a regular way to save for retirement that would be guaranteed to be there for them when they can no longer work. They do not want to have to make complex decisions about where or how to invest the money.

Latino women eagerly accepted and read the bilingual brochure researchers prepared, entitled “The Ten Things You Need to Know to Retire.” They admitted that they did not know enough about retirement planning and wanted to learn more. “This observation suggests that despite access to financial literacy and planning information in the media and in the community, immigrant women do not feel that they have adequate information. Participants have a hunger for more financial education and have enthusiastically accepted our financial education materials, suggesting that armed with good savings options and understanding of how to use them, they could and would save for retirement,” the report concludes.