Young Hispanics Need to Start Saving for Retirement

MP900446471According to 2013 research, only 26% of Hispanic families had savings in a retirement plan such as a 401(k) or IRA. In contrast, 65% of white families, 41% of black families, and 58% of Asian families and those of other races had savings in these types of accounts.

CNN Money’s article, "The retirement crisis facing Hispanics," reports that part of the reason for this is that many Hispanics—especially those in low-wage jobs—don't have access to retirement plans.

For example, immigrant Hispanic workers are frequently more likely to be undocumented and working off the books or working in low-wage jobs that don't have retirement accounts. Low rates of participation contribute to low rates of retirement savings. Hispanics may work for small businesses and in low-wage, non-union jobs that don’t offer many retirement savings options.

As a result, many Hispanics rely on Social Security as their sole financial support in retirement. This puts many workers in a precarious situation. Since Hispanics are more likely to live longer, they’re also more apt to work longer into their old age. Some Hispanic workers will work longer, and they’re going to rely on their families—and they’re going to be poorer.

When they do have access to employer retirement plans, Hispanic workers generally don't contribute as much to those plans because they can't afford it. They’re also less likely to buy life insurance and more likely to borrow against their 401(k)s.

Data shows that they’re also more likely to rely on family for financial support. While that provides a certain amount of security and stability, it can also be burdensome for younger family members. That's why millennial Hispanics need to focus on saving. They also need to think about estate planning, buying insurance, and keeping a close eye on their credit. This can help prevent a financial emergency from becoming a financial crisis.

Reference: CNN Money (March 2, 2016) "The retirement crisis facing Hispanics"

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