By Daniel Pereira
Photo Courtesy of Wikimedia Commons.
The news is teeming with reports on the next generation of U.S. Latinos, but little is said about the looming future of their parents.
Approximately half of Americans are not saving for retirement. A sobering number, and even more so when we account for the staggering number of Latinos that comprise that group. According to an ING report, Latinos reported the lowest average balances in their retirement plans, an overwhelming 54 percent said they felt “not very” or “not at all” prepared for retirement, and a whopping 70 percent do not have a formal investment plan to reach their retirement goals.
Although Latinos represent the most numerous minority group in the U.S., They often trail their counterparts when it comes to finances. A joint U.S. Census and Department of Labor finding shows 46.5 percent of Latinos are in the bottom 25 percent income group and poverty rates for the elderly are twice as high for Blacks and Latinos compared to the U.S. as a whole. This leaves most Latinos age 60 and up to rely on support systems like Social Security and family aid. These numbers are alarming and undoubtedly raise the question: are tomorrow’s Latinos, with their struggle to close the attainment gap, poised to simultaneously care for their aging parents?
Future Latinos will be occupied with not only with tepid economy, but also with a retirement crisis that impacts their communities. Although more Latinos are bilingual and attending college than ever before, these achievements typically do not include older Hispanics. The educational schism between generations prolongs the issue. By the time next-gens are thinking about their 401(k) plans, many of their parents will be too old to effectively enroll in those programs, and will instead be reliant on their children to provide for them. This creates a financial burden on the younger generation who may also be forced to eschew or delay their retirement plans.
Latin culture often places greater emphasis on familial over personal wellbeing. Parents are more willing to spend their savings on college tuition and aid for their own ailing parents rather than on retirement plans. Many working immigrants also support family members back home. It’s a catch-22, one that can only be exacerbated by the current economic landscape. Out of all minority groups, the Great Recession has hit Latinos the hardest, a group that has historically suffered from unemployment and underemployment. From 2005 to 2009, median household wealth (all assets minus all debt) among Latinos fell by 66 percent.
With lower earnings and fewer Latinos in the workforce, it’s easy to place the numbers in perspective. The retirement crisis affects everyone since older Latinos will also create and impact on the healthcare system. However, the trend does not need to continue. Community advocates, employers, and Spanish-language media need to educate Latinos on the importance of retirement savings. Even with low wages, it is possible to save money for the future, regardless of age or experience. In essence, it’s time for Latinos to stay away from the Telenovelas, and learn some basic financial skills instead.