Hispanic retirement savings rates are falling, according to the report. Recent data show that 41% of Hispanic workers said they have saved money for retirement (outside of their work or otherwise), compared to 60% in 2003.
The report shows Hispanics, on average, have less access to employer-sponsored retirement plans and a decreased likelihood of participating in employer-based retirement benefits. Only 25.6% of Hispanics are covered by employer-sponsored retirement plans, compared to 42.5% of whites and 40% of African-Americans. Twenty-six percent of Hispanic workers participate in an employment-based retirement savings plan compared to 60% of Americans overall (see “African-Americans, Hispanics Lag on Retirement Savings”)
Since they have less access to, and participation in, employer-sponsored retirement plans, Hispanics are more dependent on Social Security for retirement income, according to the report. Almost 75% of older Hispanics receive Social Security benefits, and Social Security represents the largest single source of retirement income for older Hispanics. Of those Hispanics age 65 or older receiving Social Security benefits, nearly 80% rely on these benefits for 50% or more of their income.
The report also found that Hispanics’ personal savings rate (the percent of after-tax income left after household bills are paid) has dropped from a peak of 15% in 1975 to a negative rate in 2002 and 2006; however, the rate has slowly increased to slightly above 1%. More than half of Hispanics have less than $10,000 total saved for retirement.
For those who do have employer-sponsored plans, just 20% have funds saved outside of their employer’s plan, compared to 32% of all workers.
Less than one-quarter of Hispanic workers have calculated how much money they will need to save for a comfortable retirement, compared to 42% of non-Hispanics. When asked, half of Hispanics said that they need more information to help them plan their retirement. Only 25% of Hispanics said they learned about retirement planning from a financial institution, and 64% said they learned on their own
In addition, the report noted that having less retirement savings means Hispanics are less prepared for long-term medical needs. In 2006, more than a third of Hispanics (34.1%) were not covered by health insurance, compared to 15.8% of the general population. “As a result, Hispanics may be more likely to delay retirement and continue working in order to have access to employer-based health insurance services or to generate sufficient income to pay for out-of-pocket medical expenses,” the report said.
The fully report, “Hispanic and Retirement: Challenges and Opportunities,” is available here.