Less than 10 percent of small business workers in the five top Hispanic metro areas of the United States have access to employer-sponsored retirement savings accounts.
Additionally, according to a recent study from Finhabits, the states with the largest concentration of Hispanic residents had the lowest participation in retirement savings.
Texas, Arizona, New Mexico and Florida are among the states with the lowest participation rate (under 25 percent) overall.
“We have a retirement savings problem in the U.S. and the data clearly shows a wealth savings gap with Hispanics working at small businesses,” Carlos Garcia, founder and CEO of Finhabits, said in a statement. “Our analysis found a moderate and troubling correlation between retirement savings and the Hispanic population of a city. This will have a long-term impact on the quality of life and the economy.
Garcia called for more aggressive retirement education aimed at the Hispanic community and a “need to leverage technology to enable them to invest in their future easily even when they do not have access to 401ks.”
Key findings of the study include:
- 401ks are not readily available for small business employees—the study found in the five most Hispanic metro areas only an average of 4 percent of companies with less than 100 employees offered a 401k. Even in the least Hispanic areas, access was only 11 percent.
- Southern states are the worst for small business employee retirement savings—Arizona, New Mexico, Florida, and Texas all have Hispanic population levels above 20 percent and are among the states where employees, (1) have less access to a plan through their employer and (2) are also least likely to be saving for retirement.
- Hispanic Retirement Savings Gap—the study found that cities with a higher Hispanic population have a lower number of employees saving for retirement. Tellingly, the metro areas with the largest Hispanic populations average less than one-third of employees saving for retirement compared to the five metro areas with the smallest Hispanic populations (11 percent vs. 35 percent).
- Connecticut is the best state for small business employee retirement savings—Finhabits found that 41.9 percent of small business employees in Connecticut had a retirement plan.