In almost every way, the Hispanic population in America—nearly 58 million strong—is doing better money-wise than their non-Hispanic counterparts. They tend to be more financially stable, better prepared for expenses and great at getting hired.
But there’s one area in which they’re seriously falling behind: saving for retirement.
The latest research by Elevate’s Center for the New Middle Class (CNMC) explores the personal finances of Americans with credit scores below 700—referred to as both the “non-prime” community and New Middle Class.
In its new report Hispanic Financial Experience: Prime and Non-prime, CNMC took a closer look at money-related attitudes and behaviors of Hispanics versus non-Hispanics living in America. Several admirable trends emerged among New Middle Class Hispanics compared to their non-Hispanic peers.
For instance, they are:
- 65 percent more likely to plan for major expenses
- 86 percent more likely to feel financially stable
- 38 percent more likely to save money each month
- 20 percent less likely to have had a vacation expense in the last 12 months
- 50 percent more likely to be able to cover a $1200 unexpected expense
- 40 percent more likely to be employed
“We found several bright spots in Hispanic experience, including: financial stability, savings and employment,” Jonathan Walker, executive director of CNMC, said in a statement. “We also found that U.S. Hispanic families are far more financially integrated and often rely on one another for advice. This is a particularly valuable finding in that small investments in financial literacy can pay off many times over.”
Saving in a 401k or similar plan, for example, is an area in which U.S. Hispanics could benefit from some guidance. While it’s true the population in general isn’t doing so hot at contributing to retirement savings, just 9 percent of New Middle Class Hispanics have any type of retirement account.
They’re less apt to adopt traditional banking features, too, instead favoring cash. While three times more likely to pay using a smartphone (using mobile apps and peer-to-peer payment systems), they’re 20 percent less likely to have a credit card and 15 percent less likely to have a checking account.
What’s more concerning, New Middle Class Hispanics are 23 percent less likely to spend money on routine medical expenses—”a disturbing statistic that can impact one’s future physical health,” the report points out.
Study findings could mean trouble’s ahead when it comes to paying for everyday life upon retiring (in addition to the potential for above-average healthcare costs). But data also suggest the culture may have another plan for covering living expenses in retirement.
“A stronger sense of community exists for U.S. Hispanics; thus, they are more likely to help family and friends with their finances than other demographics,” said Walker. “Along those same lines, they are also significantly more likely to seek financial help from their parents and to support their children financially.”
To be sure, it’s great to have the financial safety net of family and friends who are willing to help out when money’s tight. There are very few ways, however, to better prepare for a successful retirement than socking away money in a 401k or similar account.
Jessa Claeys is a writer, editor and graphic designer.
