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Why Latinos Face a Big Retirement Savings Gap

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Lack of access to retirement plans in the workplace, as well as inequitable eligibility requirements, are creating a persistent retirement savings gap for Latinos.

That’s according to the report “Latinos’ Retirement Insecurity in the United States” from the National Institute on Retirement Security (NIRS) and UnidosUS.

Those two problems are making Latinos fall ever farther behind as they try to save for retirement, and the report adds that just 31% of all working-age Latinos participate in workplace retirement plans, resulting in a median retirement account balance equal to $0. However, when given the opportunity to participate in plans, they are slightly more likely than other races and ethnicities to participate.

Latinos’ current retirement plan participation rate is 30.9%, compared with 53% for white workers. In addition, working Latinos who are saving have an average retirement account balance less than a third that of the average for white workers. In fact, overall, less than 1% percent of Latinos have retirement accounts equal to or greater than their annual income.

To counter this situation, the report suggests three actions that would help Latinos: expand eligibility for part-time workers, promote the Saver’s Credit — Latinos’ median household income in 2016 was $46,882, putting many well within range to qualify — and promote and further develop state retirement plans.

That last is particularly important for Latinos, since in 2014, an estimated 103 million Americans ages 21 to 64 did not have access to an employer-sponsored retirement account. State-sponsored retirement plans that automatically enroll workers not covered by their employers can help to provide low-cost retirement products to working Latinos.

The need to bolster retirement savings for Latinos is particularly important considering their proportion of the U.S. population. Says the report, “Latinos lead population growth in [the] United States, accounting for 17.8% of the total U.S. population and numbering over 57.5 million. As the largest minority group in the U.S workforce, Latinos comprised 16.8% of the labor force in 2016.The U.S. Census Bureau estimates that by 2060, the Latino population will number 119 million and will account for approximately 28.6% of the nation’s population.”


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