Helping Latinx Employees With Their Unique Retirement Needs
Support Latinx employees this Hispanic American Heritage Month—learn about their unique challenges when saving for retirement.
National Hispanic American Heritage Month spans from September 15 through October 15 and, as a part of this month of recognition, we asked ourselves at Betterment for Business: What are the unique challenges facing Latinx-American employees today? How can we learn about these challenges and address them as a part of our ongoing effort to promote Diversity, Equity and Inclusion at Betterment?
It turns out that not only do Latinx-Americans—the largest ethnic group in the U.S.—have disproportionately low retirement savings, but they also have disproportionately low access to savings. Plus gender and age also play a factor.
For employers committed to building out a financial wellness program that helps all employees, understanding the intersectional issues and how Latinx employees have unique needs and challenges is key. In this article, we’ll cover three important learnings that can help inform your wellness programs, and how you can build support for Latinx employees during this National Hispanic American Heritage Month and beyond.
Latinx Employee Savings Lag Behind White Employees
According to a 2021 report by MorningStar, only 31% of Latino households with income report that they are participating in a retirement savings plan, compared to 51% of non-Hispanic white households.
Additionally, for the median Latino households who do save for retirement, studies show less growth and less overall retirement wealth than the median white households.
When Latino families are saving for retirement, they are saving significantly less money than their White counterparts. That said, younger Latinxs are eager to save. For example, 1 in 5 Latinx respondents are actively looking to buy property in the next year, a rate more than triple that of non-Hispanic White buyers, according to the Hispanic Wealth Project.
You can encourage Latinx employees to continue to diversify their investments and to set aside retirement savings in addition to their other assets—especially if you offer an employer-sponsored match that can help them reach their goals even faster.
Access to Employer-Sponsored Retirement Plans is Also an Issue
For Latinx-Americans, access to retirement-sponsored retirement plans is “significantly” lower than it is for White workers. Overall, about 31% of Latinx workers participate in a retirement plan, compared to 51% of White workers
But, to put this into further context, they are significantly less likely to have that access in the first place. Hispanic households are 17% less likely than white households to have access to a retirement plan.
As such, Latinx-Americans, particularly younger populations, feel the pressure of providing a social safety net to their families and loved ones. They are 51.6% more likely to live in multi-generational households than the general population and, when surveyed, one half agreed that it was more important to help friends and family members now than to save for their own retirement.
It is important to offer a full-picture financial wellness solution that helps to address the unique needs of Latinx workers, which can include planning for the retirement of their loved ones or investing in additional real estate for their growing families.
Older Women are Disproportionately Affected
Nearly one in five Latinx women (18.6%) over the age of 65 live in poverty. And without the income from work, this population would not be able to meet the cost of basic living expenses.
Separately, Black and Latinx women make up a disproportionate share of domestic workers, with Latinx women making up over 29% of domestic workers as compared to only 17% of all other workers. Only 19% of domestic workers have access to health or retirement benefits, compared to 49% of other workers.
Consider your employee population and how factors like the pandemic may have affected them and the members of their household. Offer financial planning services and remind them that it’s never too late to get started with their savings, debt repayment, or other financial goals.