Last week we wrote about the many ways race and ethnicity affect retirement savings. Today, we want to focus more closely on the challenges many Latinos face in saving for retirement. Despite being the fastest-growing demographic group in the United States, Latinos have lower levels of retirement savings than other groups. This retirement insecurity has a profound economic impact on Latinos, their families, and their communities.

In December 2018, the National Institute on Retirement Security (NIRS) released the report Latinos’ Retirement Insecurity in the United States in conjunction with UnidosUS. The report builds upon previous NIRS reports, including Race and Retirement Insecurity in the United States and Millennials and Retirement: Already Falling Short. The report examines Latinos ages 21-64 using data from 2014 and considers their levels of retirement plan access, eligibility, and participation, as well as their overall levels of retirement preparedness.

Some of the report’s key takeaways include:

  • As with other groups that face high levels of retirement insecurity, Latinos face challenges with employer-sponsored retirement plan access and eligibility.
  • The retirement plan participation rate for Latino workers (30.9%) is about 22 percentage points lower than the participation rate of white workers (53%).
  • Overall, less than one percent of Latinos have retirement accounts equal to or greater than their annual income, a major hurdle to retiring securely.

There are some significant differences between Latinos who work in the public sector versus those who work in the private sector. Eighty-six percent of Latinos who work in the public sector have access to an employer-sponsored retirement plan compared to just 47.7 percent of those who work in the private sector. This is the largest access gap of any demographic group, although every group has less access for private sector workers.

Defined benefit pensions remain common in the public sector and participation in public pension plans is almost always mandatory for public employees. This goes a long way toward reducing retirement insecurity because it mostly eliminates issues relating to access, eligibility, and participation. Unfortunately, Latinos tend to be underrepresented in public sector jobs that offer pensions. According to the Economic Policy Institute, in 2013, only 9 percent of Latino households had a defined benefit pension, compared to 20 percent of black households and 24 percent of white households.

As Latinos continue to increase as part of both the overall population and the labor force, overcoming barriers to retirement security for this group will be critical. Any effort to expand retirement security for working people must begin with protecting existing defined benefit pension plans, which do provide a secure and reliable retirement. If pension plans are gutted, no other retirement savings plan will be able to make up for that loss.