Advisers and Sponsors Together Can Boost Hispanic Workers’ Retirement Savings

While among one of the fastest growing population demographics in the country, studies have shown Hispanic workers face major challenges in allocating enough towards retirement savings.

In a 2016 study conducted by The Urban Institute, it was reported that immigrant Hispanic retirees age 65 and older held a far worse chance of being satisfied with retirement than non-Hispanic whites. Instead, Hispanic retirees were about twice as likely to be “less gratified during their retirement.” Furthermore, a Principal study found Hispanic workers born outside of the United States have the lowest retirement plan participation rate of all other workers, often due to language barriers and cultural influences.

Why? Well, there’s a list of factors. For starters, Carlos Rojas, director of Consumer and Cultural Engagement at Principal, believes the problem can be attributed to little knowledge in the concept of saving for retirement.  “It’s not a lack of discipline, but just an understanding of the system,” he says.

While Hispanic workers may have trouble in allotting enough for retirement, Rojas explains that the issue does not lie with saving in itself. Instead, it runs on several other factors impacting workers, including caring for family back in their native country; a distrust of institutions and employers; and even plans to retire in their homeland.

“There’s definitely an absence of financial literacy but not in financial discipline,” says Rojas. “Their ability to send money back home; that actually highlights the fact that they have the ability to purposely save for a reason.”

Regarding a sense of mistrust towards employers, Rojas found that the concern can be addressed by highlighting the generosity of matching contributions. Many employers, according to Rojas, “have noticed how workers would fail to realize the amount paid into the plan by the sponsor as well.”

“When we started paying attention, observing their behavior, they didn’t [realize],” he says. “They really missed it, and when we delve deep into it, they really had this distrust that comes from a very rooted concept where they would say, ‘why would my employer even care to do this for me?’”

NEXT: Focusing on cultural issues

To combat these underlying issues, Rojas suggests plan sponsors should focus on the cultural needs of Hispanic workers, instead of concentrating on fixing the language barriers involved. Whereas bilingual representatives can play a vital role in educating workers on participation, employers need to take time to focus on the “right levels of commitment towards a 401(k) education,” says Rojas. “We need to be bicultural, not just bilingual.”

In order to do so, Principal’s Hispanic Market Program utilizes several solutions targeting culturally engaged participants, focused on providing better context in written educational materials rather than the word-for-word translation.

Sean Jordan, vice president of Participant Development at MassMutual, believes engagement—not literacy—should be the driving force in bringing Hispanic workers into retirement savings programs.

“We want to understand, first, the sort of behavior they need to adopt. This is half the battle. They need to understand what they need to adopt to get to a better outcome,” he says.  

Jordan notes that while language barriers are an issue, the real conflict often lies in the cultural difference between a representative and worker. In order to break down these barriers, at MassMutual, representatives who assist Hispanic employees are most of the time, Hispanic themselves. To Jordan, this allows workers to feel a better sense of comfortability and easiness.

“It helps, culturally, not just to have the language skills, but also to have the member of the culture saying, ‘hey folks, let me explain this to you in a different way, or let me represent it in a different way, than you might otherwise get.’ It’s part language, part cultural,” he says.

Currently, between 20% to 25% of MassMutual’s representatives are bilingual in English and Spanish. 

Furthermore, MassMutual conducts both English and Spanish educational sessions during the same meetings, where one instructor will teach material and answer questions in both languages. The company also employs in-house translators during calls between workers and representatives, instead of utilizing third-party resources.

While both Rojas and Jordan believe the services provided are crucial, it’s the lasting effect in saving that holds the highest importance.

“You want to really take advantage of the fact that someone’s motivated in that moment, and help them do it and make it easy and intuitive,” says Jordan.