Moving beyond bilingual

The largest ethnic group in America is also furthest behind in saving for retirement [1]. Hispanic workers born outside of the United States have the lowest retirement plan participation rate of all other workers [2].  Sixty-nine percent of Latino working-age households do not own assets in a retirement account, compared to 37 percent of white households [3].

As the U.S. Hispanic population continues to grow — Hispanics are expected to account for 75 percent of the nation’s workforce growth in the next decade [4] — so does the size of the opportunity for financial professionals, whether you are trying to work one-on-one with an individual or are helping employer prospects and clients meet the retirement needs of their employees.

But how do you bridge the cultural divide that may be preventing U.S. Hispanics from saving effectively for retirement? It isn’t as simple as translating materials to Spanish or speaking the language yourself.

Creating a culturally-appropriate education and enrollment experience

In research groups and live enrollment meetings, we found that simply translating materials to Spanish without considering overall cultural views falls short in encouraging U.S. Hispanic workers to save for retirement.

Retirement plans and Individual Retirement Accounts (IRAs) are not universally appealing to all groups. These may very well represent concepts depending on the level of acculturation of the workforce.

Our research found a need to go beyond accommodating language needs — translating materials to Spanish — to a more meaningful approach addressing the cultural underpinnings that may still influence how U.S. Hispanics think about their financial futures.

Levels of cultural influence

Understanding how to reach foreign-born U.S. Hispanic workers is complex. Retirement planning means different things within the Hispanic culture, depending on how adapted a group is to the U.S.

Success depends on understanding the level of acculturation — the degree to which a foreign-born Hispanic worker has adopted American cultural practices and the English language. Any given U.S. Hispanic workforce might represent the range of these levels of acculturation [5].

• Unacculturated: The 26 percent of Hispanic adults who are foreign-born and remain Spanish-dominant in language and culture. Eight out of 10 in this group use only Spanish at home or use it more than English. They have preserved their own culture, only gradually adopting elements of a second culture.
• Partially acculturated: About 63 percent of Hispanic adults. About half consider themselves to be Spanish-dominant and about one-third are bilingual. They have adopted a new culture while gradually losing some elements of their original culture.
• Mostly acculturated: Eleven-percent of U.S. Hispanic adults are in this segment and the vast majority (95 percent) of them was born in the United States. Most (71 percent) primarily use English, with 22 percent being bilingual.

While U.S.-born Hispanic workers have lower plan participation than white workers, so do many other minority groups. It is the low rate of participation among unacculturated foreign-born Hispanics that markedly lowers the overall participation rate for Hispanics. This is true across all age groups and income brackets [6].

How culture blocks savings among U.S. Hispanics

U.S. Hispanics born in other countries represent some 22 subcultures. Understanding the cultural factors that drive how some U.S. Hispanics prepare for retirement is the first step to overcoming barriers to saving. Here are some of the most common cultural influences:

• Lack of exposure to the concept of retirement: Although Hispanics tend to save in other ways for other reasons, many who have immigrated are not used to saving money for the future. The U.S. Hispanic population has had little exposure to modern-day concepts of retirement, such as 401(k) plans.
• Family matters: Among U.S. Hispanics, the attitude toward financial planning and retirement is consistent: family takes care of family. There is not a reliance on financial institutions or employers for help. In the Hispanic culture, family support is the primary driver of retirement readiness. The young take care of the old. Those with jobs take care of those without.
• Absence of financial literacy but not financial discipline: Many unacculturated U.S. Hispanics are unfamiliar with key financial concepts, in part because they generally are not working with a financial institution. While they may not appreciate the value that investing in stocks, bonds or mutual funds can have on their long-term savings goals, they are accustomed to budgeting. It is not uncommon for many to send a portion of earnings back to family in their native country. Those who do use investments, generally do so very conservatively.
• Distrust of politicians and institutions: Unacculturated Hispanics tend to harbor a distrust of politicians and institutions, including regulatory and financial institutions. There may be a concern that in case of emergency, they wouldn’t be able to access their savings or in the case of a national emergency, the money might be subject to government confiscation.
• Distrust of employers: There may also be a distrust of whether the money they contribute to a retirement plan might not be distributed as promised.
• Plans to retire in their native country: Moving back to the homeland may be the end retirement planning goal for some foreign-born workers. Another is to share retirement savings with family members back home. In both cases, workers may be worried about how they would access the assets in a retirement account if they die or move to another country. Unless these worries are addressed, other appealing features of a retirement plan will fall on deaf ears.

Five key concepts to bridge the cultural divide

It is clear that language alone isn’t enough to bridge the cultural divide. Our research found it requires a program of education tailored to address cultural attitudes and beliefs in order to encourage Hispanic workers to take action.

We’ve developed five key concepts to help increase engagement and meet the specific needs of Hispanic workers.

1. Think “bicultural” not “bilingual” Bicultural is much broader than using a different language. It means navigating seamlessly between Hispanic and non-Hispanic cultures. It means incorporating a cultural sensitivity into all communications.

For example, using the concept that family takes care of family can help introduce workers to the idea that an employer-sponsored retirement plan can be used to help take care of family after retirement.

1. Transcreate, don’t translate – Don’t translate word-for-word. Instead recreate messages in a way that retains financial meaning while incorporating cultural relevance.

Educational materials that are translated into Spanish, without taking into account the underlying meaning, lack the proper context for full comprehension by a Spanish-speaking audience.