The following article by Forbes retirement finance columnist Kerry Hannon is an excerpt of an article she wrote as part of a MetLife Foundation Journalists in Aging Fellowships, a program of New America Media and the Gerontological Society of America.
When it comes to retirement savings, Latinos are failing. That’s what a new survey rolled out about a week ago by ING Retirement Research Institute reveals. In many ways, it echoes what has been laid out in previous minority retirement studies.
Here are some of the ING report’s findings:
• While all populations found retirement planning to be an overwhelming task, a hefty 54 percent of Hispanics say they felt “not very” or “not at all” prepared. This compares with 50 percent of African-Americans, 48 percent of white and 44 percent of Asian respondents who said they did not feel prepared.
• Hispanics surveyed reported the lowest average balances–$54,000–in their retirement plans, considerably less than the average balance across all groups –$69,000. In contrast, Asian respondents reported having the highest average plan balances –$81,000.
• The researchers found that 57 percent of Hispanics have never calculated how much money they’ll need to continue their current lifestyle, and 70 percent do not have a formal investment plan to reach their retirement goals.
Findings for the “Retirement Revealed” study came from an online survey conducted last October by ORC International. Respondents were 4,050 adults (including 500 African-Americans, 500 Hispanics and 350 Asians) between the ages of 25 and 69 who were employed full-time with annual household income of $40,000 or more.
The study adds to a growing pile of minority retirement polls unveiling a bleak financial landscape for many Hispanics, such as a January report by the Pew Hispanic Center and the Bureau of Labor Statistics report that the unemployment rate among Latinos in December 2011 was 11 percent, above the national level.
The ING survey found that about a third of Hispanics surveyed blamed insufficient income. More than one-quarter cited a high level of debt, followed by a lack of knowledge about what their options are as their biggest barriers to saving. But those higher up that wage scale still lack of retirement savings, according to a 2009 retirement savings survey across different minority groups by the Ariel Education Initiative, the non-profit arm of money management firm Ariel Investments, in conjunction with Hewitt Associates.
For some Hispanic workers language barriers and a lack of Spanish-speaking financial advisers contribute to the problem. For many, it’s cultural. “In the Hispanic community, parents will sacrifice their own financial future in order for their children to advance,” Fabian Gonzalez, vice president of multicultural sales at ING U.S., said in an interview.
In Latino culture, it’s not unusual for funds to be used to support immediate and extended family and friends. It’s common to take care of aging parents or contribute to child’s education before saving for one’s own retirement. And in fact, ING found that 63 percent of Latinos surveyed have dependents compared to 54 percent overall. Plus, a lot of Hispanics send money away to their countries of origin to help out other family members there, as well.
Across all groups, there’s a feeling that employers could do more to help educate them about their retirement goals, according to the ING survey. And the Pew survey found that Latinos are more upbeat than others about the prospect for better days ahead—both for themselves and their families in the short term and for their children over the long haul. Fully two-thirds, 67 percent of Latinos say they expect their financial situation to improve over the next year, compared with 58 percent of the general population.
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The following article by Forbes retirement finance columnist Kerry Hannon is an excerpt of an…