- Author: CNN Money by Tanzina Vega
According to data from the Economic Policy Institute, only 26% of Hispanic families had savings in a retirement plan like a 401(k) or IRA, in 2013. Meanwhile, 65% of white families and 41% of black families and 58% of Asian families and those of other races had savings in such accounts.
Part of the reason for this gap is that many Hispanics, particularly those that work in low wage jobs, don't have access to retirement plans, said Monique Morrissey, an economist at the EPI who analyzed data from the Federal Reserve for the report.
Immigrant Hispanic workers, for example, are often more likely to be undocumented and therefore working off the books or work in low wage jobs that don't offer access to retirement accounts, Morrissey said. Native-born Hispanics, however, are more likely to have access to and participate in retirement accounts at rates closer to those of African-Americans, Morrissey said.
"Most whites are not doing well, blacks and Hispanics are doing terrible and immigrant Hispanics are doing the worst of all when it comes to retirement savings," Morrissey said.
Low rates of participation also contribute to low rates of retirement savings. In 2013, white workers between the ages of 32 and 61 had an average of $125,000 in retirement savings compared to $26,500 for blacks and $16,800 for Hispanics. For Asians and those of other races or ethnicities, the average retirement savings in 2013 was $100,000.
"[The] savings in these accounts magnify income inequality," Morrissey said.
The retirement savings gap also closely mirrors the overall racial wealth gap in America. Wealth, or net worth, is the value of assets including your home, retirement savings and income minus the debt owed against those assets. According to federal data, the median wealth for white families in 2013 was around $141,900, compared to Hispanics at about $13,700 and blacks at about $11,000.
For Morrissey, the trends are troubling. Initially, plans like 401(k)s and IRAs supplemented pension accounts or provided an alternative for employees who did not have access to a pension, Morrissey said. But since the 1990s, they have become the main source of retirement savings for many private sector workers. And since many employers have begun matching less of their employees' contributions, more of the savings burden has been placed on employees.
Access is another issue. Hispanics and blacks often work for small businesses and in low-wage, non-union jobs that offer few retirement savings options, Morrissey said. The overall number of public sector jobs with secure pensions, which were often considered a clear path into the middle class, has also been on the decline.
That has only served to widen the gap.
At least two-thirds of all of the wealth in 401(k) accounts is concentrated among the top 20% of earners, Morrissey said. Those who get paid more "can afford to put in more, they can afford to invest in higher return assets, they are more likely to have more generous employee matches," she said.
As a result, many Hispanics rely on Social Security as their sole financial support in retirement, a move that experts say puts many workers in a precarious situation.
Since Hispanics are more likely to live longer than blacks and whites, they are also more likely to work longer into their old age, Morrissey said. Some Hispanic workers "are going to work longer, and they are going to rely on their families and they are going to be poor," she said.
Undocumented workers who may not be using their own Social Security card to qualify for employment and for tax purposes will also see little, if any, of the Social Security benefits they accrue over the years, Morrissey said.
"We have that huge swath of the demographic that is underprepared and underfunded and Social Security is not going to be enough," said Ramona Ortega, founder of Mi Dinero Mi Futuro (My Money My Future), a financial technology company that helps Hispanic millennials manage their money.
When they do have access to employer retirement plans, Hispanic workers generally don't contribute as much to those plans "either because they can't afford it or because they don't understand it," Ortega said. Hispanics are also less likely to buy life insurance and more likely to borrow against their 401(k), she added.
They are also more likely to rely on family for financial support. While that provides a certain amount of security and stability, it can also come at a cost for younger family members. That's why millennial Hispanics are Ortega's focus. "We don't think about financial planning because we are in survival mode," Ortega said.
Young Hispanics need to start saving for retirement much earlier, Ortega said. They also need to think about estate planning, buying insurance and watching their credit. Doing so, she said, can help prevent "a financial emergency from becoming a financial crisis."
Source: Published originally on CNN Money as The retirement crisis facing Hispanics by Tanzina Vega, March 2, 2016.
- Author: Mass Mutual Financial Group
"This newest research is in line with our ongoing State of the American Family Study; it shows that Hispanics are invested in their future," said Chris Mendoza, Vice President, Multicultural Market Development at MassMutual. "They recognize the many facets of financial security— valuing planning and research more than the general population. They are closing the gap but still need knowledgeable guidance to help ensure financial stability and informed decision-making."
Hispanics are more likely to have sought financial information overall (82 percent vs. 75 percent) and from financial institutions (48 percent vs. 44 percent) more than the general population. They also are more likely to seek out information on personal finance and retirement planning than the general population, turning to family (37 percent vs. 27 percent), friends (26 percent vs. 19 percent), and significant others (24 percent vs. 18 percent) for information.
In retirement, education, and emergency security, they take fewer risks. Hispanics are almost twice as likely (51 percent) than the general population (27 percent) to carefully research and plan every detail of their education and are more likely to have sufficient "rainy day" funds (35 percent vs. 31 percent). Additionally, they are more likely to carefully research and plan every detail of their retirement (42 percent vs. 32 percent) and are more likely to work at their retirement plan until they believe it's perfect (38 percent vs. 24 percent).
Source: Published originally on Mass Mutual Financial Group as Hispanics Less Likely To Leave Their Financial Future To Chance, January 14, 2015.
- Author: Patti C. Wooten Swanson
Now, when you take the San Diego Saves Pledge you can choose to receive text message tips and reminders...And if that isn’t enough, we are giving away $500 to help one person reach their savings goal. (Must be 18 years of age or older to win and standard text messaging rates apply.)
Enter to win the $500---here’s how:
1. Take the San Diego Saves Pledge between now and June 30, 2013
Choose a savings goal and choose an amount to save.
2. Click the box to receive text messages.
Get messages about your saving goal:
• Tips to help you find money to save
• Advice about saving
• Reminders to help you save for your specific goal
Share this with friends and family.
This may just what they need to set their own goal to:
• Start an emergency fund
• Pay down debt
• Save for education or retirement
It's a win-win!
One lucky person will win $500 to help them reach their saving goal---and everyone wins by staying motivated to save.
You won't get unwanted messages or marketing.
*San Diego Saves (SDS) is an educational program of the University of California Cooperative Extension program in San Diego County that is conducted in partnership with the Consumer Federation of America. The program seeks to motivate, encourage, and help families and individuals to save and build wealth for a secure financial future.
Good Luck and Happy Saving!
- Author: Patti C. Wooten Swanson
Today I want to share some general rules from North Dakota State University Extension Service about using your income tax refund.
1. Think before you spend
While you're waiting for that check, do some planning. Talk with family members about your financial priorities.
- Are you behind on the mortgage or a student loan?
- Do you owe money on your credit cards?
- Does the family need a new refrigerator?
- Have you been postponing major dental work
due to lack of funds?
Planning ahead instead of just heading to the mall or electronics store will help you get the most important “bang for the buck” when you spend (or save) that refund check.
2. Use (at least) part of the money to build long-term financial security
Read any list of ways to get the most out of your tax refund and you will always find “saving for retirement” as an option.
You can't go wrong with retirement savings, but here are some other ways to use your refund that can lead to future financial security:
- save for your child's college education
- start or add to an emergency fund
- pay off high cost credit card debt
- spend money on professional development that can
lead to higher pay and greater employability-- learn another language, finish your college degree, enroll in a program to learn new skills, such as project management or how to use the newest computer software in your field.
3. Don't use the refund to go further in debt.
Buying that big-ticket item you've been wanting might be the right thing for you to do. But, if you spend the money as a down payment on a major purchase---such as a big screen TV, new bedroom furniture, or a car---you create more debt and will be taking on new monthly payments. Before making the purchase, think about whether or not your budget can support another bill.
4. Don't throw away your money on loan fees to get a quick refund.
Refund anticipation loans (RAL) charge you a fee to loan you part of your refund before the government sends your check.
Why should you pay for that?
Instead, file your tax return electronically and receive the refund payment in just 10 days. Enjoy ALL your hard-earned money. (That's what the tax refund is you know!)