Educando Latinas About Retirement

The results of a shocking survey last year exposed that 54 percent of Hispanos were not at all prepared for retirement. According to ING’s “Retirement Revealed” study, Latinos reported the lowest average balances in their retirement plans of any other ethnic group in the U.S. And a whopping 70 percent have no investment plan to reach their retirement goals.

Why is this the case? A, more importantly, what are we to do?

While Latinos’ love and sense of family is one of our most endearing cultural trademarks, it might be hurting our savings. Studies have shown that instead of building a savings account for our golden years, many Latinos choose to spend money on supporting their children (even when they’re older) and extended families. While we might think we'll get back that support from our children when we're older, in this still-rebounding economy, it’s not something anyone can bank on.

Finances can be like the oxygen masks during the safety videos on airlines: "Place the oxygen mask on yourself first, then on your loved ones." The idea here is you can't give what you don't have. Building financial savings for yourself now will safeguard your entire family down the road.

There are two common types of retirement savings plans:

  • 401(k) Plans
  • According to the ING study, only about one in four Latinos has a 401(k) and only one in ten Latinos have individual retirement funds. The study shows that Latinos (as well as many, many Americans) don't really understand how these plans work.

    In short: 401(k) plans are offered by your company that you invest a percentage of earnings. Depending on your employer, they may match a certain percentage of your contributions to the plan. The money is usually invested in mutual funds or in your company stocks.
  • Individual Keogh Plans
    An individual or a Keogh plan is a personal retirement plan for small businesses and for those who are self employed. This tax-deferred plan is overseen by the 401(a) tax code and allows workers to contribute a specific amount of money each year before taxes out of each check: So you get a tax break for the money you put into the plan each year, as well as gain interest tax free until you want to start taking money out of the Keogh account.

Meet With a Financial Planner
If you work for an organization that offers a 401(k), set up a meeting with your human resources department so they can walk you through the process. Similarly, if you own your own business, set up a meeting with a finical planner, which can be done at your bank, to find out the best options for you.

Savings Plan
Commit to saving some of your income every month -- for instance, 10 percent. Also, try and build up your nest egg when you get big chunks of dinero, like a tax refund.  While you may have to forgo that new car or vacation this year, a little money saved now will make a world of difference later.

by Robyn Moreno