A new study highlights the dilemma of the aging Latino population – no retirement savings to life off of.
The study by the National Institute on Retirement Security concluded nearly 70 percent of Latinos have no money put away for their retirement. In addition, 62 percent of Latinos do not have access to or are participating in any employer-sponsored retirement plans.
This is a bad omen for the nearly 23 million working Latinos. The retirement savings rate for white American is 37 percent.
The study points out that many Latinos are employed in jobs and industries that do not provide retirement benefits. For many Latinos their minimum wage jobs do not allow for a set-aside for retirement. Low-wage workers and workers in firms with fewer than 100 employees are much less likely to have access to a retirement plan at work. During the economic recession Latino and African Americans dipped into their retirement accounts at a higher rate than any other demographic to survive. A study shows that a majority of Latinos who left jobs in 2010 cashed out their 401(k).
Three out of four Black households and four out of five Latino households age 25-64 have less than $10,000 in retirement savings, compared to one out of two white households. The mean savings rate of Latinos was $17,600 vs. $111,740 for whites.
The study concluded that all Americans face financial shortfalls for their retirement. The situation for Latino workers is “particularly dire.” Financial experts believe someone needs 8-11 times their annual income in savings in order to maintain their standard of living upon retirement.
Experts are urging everyone to focus on the lack of retirement readiness. Otherwise Latinos and others who are ill prepared for retirement will be vulnerable to economic hardships and may need to rely on public assistance as senior citizens.
The study examined racial disparities in retirement readiness amongst workers age 25-63.