The Retirement Crisis in the Hispanic-American Community

You may or may not know that there is a retirement crisis in America: According to a 2018 UnidosUS report, “only 31% of Latino workers participate in an employer-sponsored retirement plan, compared to 48% of all other workers ages 21 to 64” . Some states are working towards closing the gaps of this disparity by implementing retirement savings programs, some of which automatically enrolls workers into an individual retirement account. 

However, education and legislation are not catching up quickly enough. There is an opportunity to provide more education around retirement for the Latinx community, especially at an early age! The earlier someone starts investing and contributing to their retirement, the more power we give the math to do magical things!

Retirement planning is one those action items that, depending on your age, is either a pressing matter or one of the many things that keeps getting pushed back. Everyone has a different level of understanding, some people are trying to find the distinctions between the letter and number combinations of a 401K, Roth IRA, SEP IRA, or 403b; while others are contributing to their retirement but unsure about how much they should be contributing to these accounts. Here are some tips to setting up your future self! 

Magic Box

Albert Einstein said, “Compound interest is the most powerful force in the universe.” Investment accounts allow your money to grow on top of its growth by the simple act of stashing money away consistently and over a long period of time. Put in another way, Professor Scott Galloway from NYU’s Stern School of Business describes it as: “Put $1K into a magic box, and when you’re ready for it, in 40 years, presto … it’s $10–25K. If you could have this magic box, how much would you put in it?” (Galloway, “Happiness & the Gorilla). Compound interest works harder for you the sooner you begin, and it’s a work of habit.

Healthy Habit

If you’re working with a Certified Financial Trainer, they can help you determine if you’re ready to start contributing towards your retirement accounts.  One of the first things to do is find creative ways in your budget to squeeze out some extra savings and, most importantly, begin the habit of just putting money away.  At these formative stages, it is more the mindset change than the actual dollar amount that matters. Just a few dollars a month can set in motion a crucial habit that compounds over time. This habit is what allows you to go from a few dollars here and there to a set dollar figure. It then can go from a set dollar figure to a fixed percentage of your income. 

No matter where your financial journey begins, let this idea of a gradual build-up follow you. You do not, on your very first day, start lifting the heaviest weights at a gym and count on that being a recipe for long term success. You instead work with the weights that are at your current strength level and as those begin to get easier you build up the strength and confidence to tackle heavier weight. Building up your monthly savings, investment, and retirement balances is no different.

Ways to help

When it comes to specific ways to help and support the Latinx community with the issue of retirement planning, consider the following:

•  Promote financial literacy: Access to easy to understand personal finance material and education is essential and applies to everyone across the board

•  Support key organizations: Great organizations are on the ground like the United Farm Workers Foundation, Coalition for Humane Immigrant Rights, and Latinos for a Secure Retirement looking to create this change in the Latinx community.

• Vote!: Pay attention to state & local sponsored programs that champion the ideas mentioned above. Your respective states might be deciding whether or not to fill the gap left by the private sector when it comes to issues surrounding retirement planning.

Ready to take your finances to the next level? 
To get started schedule a free 20 minute consultation call to speak to a member of our team. We will ask you a few basic questions to get to know you more, walk you through our financial training program steps, and of course answer any questions you may have. No pressure to join!