Newsflash for retirement plan advisors who target the Hispanic marketplace. Latinos in California are the least likely to work for an employer that offers a retirement plan, and even for those who have access to a plan at work, participation and savings are relatively low.
The report, released by the National Council of La Raza (NCLR) and the Prudential Foundation and titled “Enhancing Latino Retirement Readiness in California,” also finds that Latinos make up the largest share of workers who could benefit from the California’s state-offered 401(k), the Secure Choice Retirement Savings Program. There are 3.8 million Latinos in California who lack access to a workplace retirement plan, according to the report.
“California’s makeup represents the future of America, making our state the ideal place to seek solutions to growing economic inequality,” Delia de la Vara, vice-president of NCLR California Region, said in a statement. “Our study shows that California has the opportunity to prevent a national retirement crisis by expanding options for Latinos and others to save for retirement in the workplace.”
More than half of all working-age Americans are unprepared for a financially secure retirement, leaving the nation vulnerable to a retirement savings crisis. The NCLR report adds to the growing body of evidence demonstrating that the looming crisis would disproportionately affect Latinos.
“California is widely considered a harbinger of national demographic changes,” the report claims. More than 39 percent of the state’s population is Latino. Latinos are projected to account for most of the growth in the American workforce between 2010 and 2050.
“At Prudential, we’re committed to helping Latinos and other underserved communities plan for both their retirements and overall financial security along the way,” Harry Dalessio, senior vice-president of sales and strategic relationships at Prudential Retirement, added. “Helping these communities prepare for retirement is a positive for all of us—our communities, our company and the economy will be stronger and more successful if everyone is more financially secure.”
Passed into law in 2012, Secure Choice seeks to provide individual retirement accounts (IRAs) for workers whose employers do not offer a retirement plan. Currently in the design phase, the program includes a number of important features that could expand opportunities to save for retirement, including automatic enrollment in workplace plans and the ability to keep an account when changing jobs.
“While there is not one answer to our retirement savings challenges, Secure Choice could serve as a model for the rest of the nation in how to expand access and participation in workplace plans,” de la Vara concluded. “The success of Secure Choice will depend on how successful it is in converting Latino workers into savers.”
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
