Latinx Retirement: Saving Despite Barriers

Marybeth R. grew up as a first-generation Mexican American in a family who immigrated to California in the 1980s.

"When I was a child, retirement for my family typically meant living in a multigenerational household with adult children helping to support you when you became too elderly or tired to work," said Marybeth, an Operations and Integration Analyst in BECU's Office of Equity and Inclusion.

That approach to retirement — rather than saving and investing in retirement accounts — is common within the Latinx community. A Federal Reserve survey released in 2024 found that Latinx respondents were the least likely to have tax-advantaged retirement accounts or pensions. The respondents were also the least likely to say their retirement savings was on track.

Retirement accounts allow contributors to grow investments, which are untaxed until withdrawn later. In retirement, the contributor may have a lower taxable income and, therefore, face a lower tax bill on investment earnings.

Data shows that Latinx populations generally make and save less money, retire earlier and live longer — which could lead to financial challenges for older adults and future generations. Yet new approaches could change that situation, and more education could help bridge gaps.

Complicating Factors

Over the past 20 years, research has repeatedly shown another finding that complicates finances for older Latinx people. In general, Latinx populations have a longer average life expectancy of 82 years, according to the National Institutes of Health, compared with most ethnic groups other than Asian populations.

Researchers are now untangling why that may be, according to a report in STAT, a publication focused on health and medicine. Researchers are also examining contributing factors such as specific country of origin, and how strong family and community networks improve health outcomes.

Many Latinx retirees are more likely to have retired early (before age 65), according to another Fed report. While early retirement might sound nice to some, the Fed research notes that across all groups, early retirement includes retirement due to health problems, having to care for a family member, lack of work or being forced to retire.

Retirement before 65 can also lead to a financial hit due to loss of employer-provided wages and health insurance and permanently reduced income from Social Security. Around 80% of Latinas rely on Social Security for most of their retirement income, according to MANA, a National Latina Organization. That's twice the rate of most Americans.

Reasons for Less Retirement

Reasons for a lack of retirement savings are numerous. As a 2019 report from the Latina Savings Project pointed out, saving for the future can be hampered by inadequate or volatile income, lack of bank access or financial knowledge, debts, unexpected expenses and financially helping family members.

The Hispanic Wealth Project points to the Employee Benefit Research Institute research, indicating that many middle- and higher-income Latinx people prioritize financially helping friends and family before retirement goals.

However, several studies have noted more broadly that at least one serious barrier is a lack of access to retirement accounts. Latinx households are 17% less likely to have access to a retirement plan than white households; overall, only 52% of all workers can save money using workplace retirement accounts.

Marybeth learned about saving with a 401(k) at age 19, when her human resources manager recommended saving a percentage of each paycheck in a 401(k) retirement account.

"My HR manager told me, 'you won't even notice it, but it will help you when you're older,'" Marybeth said.

She started with just 1% of each paycheck. After a wage raise, she increased her contribution to 3%.

"As a single mom, I was living paycheck to paycheck but reminding myself it was for our future," she said.

She evaluated contribution amounts and employer retirement matching policies with each job change and raise. She calculated a minimum cost of living for herself and her family. She ensured she could cover extra expenses and emergency funds. Then, she adjusted her 401(k) account contributions to add what she could.

Women across all income levels participate in retirement accounts at significantly lower levels than men. One 2022 report notes that the Latinx population tends to be younger, so other needs, such as rising rent costs, can take center stage.

Yet there are promising recent developments, including growing holdings of real estate investments and retirement accounts. The 2022 report noted that "Latinos held a majority of their wealth in real estate." And while fewer than half of Latinx households owned financial investments, among Latinx households with financial investments, 33% owned a retirement account in 2022, up from 28% in 2013.

She reviews her retirement portfolio regularly to adjust for any market fluctuations and changes in her financial situation.

Several organizations and initiatives point toward additional potential solutions.

The Hispanic Wealth Project noted that more culturally relevant, bilingual educational resources, customer service and financial advice could encourage saving. Financial institution partnerships with community organizations could also create accessible, easily understood, culturally relevant investment products and platforms for Latinx investors.

One such recent example might be seen in the bicultural approach within the mobile retirement platform Principal. The app offers a Spanish-language option and accounts for cultural influences "to accurately express meaning and purpose."

Some states are offering solutions to increase retirement account access, including automated savings programs. These state-managed programs have launched in Oregon, Maine, California, Maryland, Illinois, Virginia and Colorado, with several more slated to launch soon. Enrollees are automatically opted in, with the ability to change amounts and investments in the future.

For example, OregonSaves is open to self-employed people and people with employers who do not offer a workplace retirement plan. The plan's information is available in English and Spanish.

In the past decade, the Latina Retirement Savings Project was initiated to provide information on and incentivize savings among low- and moderate-income Latina women. Initiated by the Women's Institute for a Secure Retirement and MANA, a National Latina Organization, the project is now a turnkey toolkit.

The project centered around a financial education workshop and experience. The workshop guided participants through a no-fee credit union savings account signup. They could earn a $60 savings match if consistently saving $20 a month for six months, plus a bonus after nine months.

The results? Most project participants enrolled, and about half continued saving. About four in five of those saving did save consistently and enough to earn a match. The project demonstrated the power of access, education and incentives.

You have less time to save for retirement than you think, Marybeth pointed out.

"Time goes by quickly," Marybeth said. "We see the charts and hear how often we need to start retirement planning and all the options, which can be very overwhelming."

Her advice to others? "Start with questions, talk to your friends and family, talk to a financial planner, do your research," she said. "I wish I had asked more questions or sought an expert to help planning sooner. It's never too late to start, and it's never too late to talk to your family about their plans."

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