Editor's Note: In celebration of Hispanic Heritage Month, we will be posting a series of articles on some of the topics that interest Hispanics the most. Stay tuned for future installments here on Ask Experian to read general credit and personal finance topics that can help everyone achieve their financial goals. You can also read our first post on Tres Steps for Buying Your First Casita.
When there are bills and expenses to pay like housing, food, gas, and utilities, the last thing on many Hispanics' mind is carving out a few dollars each month for retirement. Even if they do have some money saved, a third of Latinos withdraw money from their retirement accounts to use toward monthly bills, according to a poll by the Associated Press-NORC Center for Public Affairs Research.
Saving for retirement is a life-long endeavor. The sooner you start a plan and commit to it each month, the better. While not many in our comunidad are saving, the good news is that the new generation thinks differently. A Wells Fargo report showed that 42% of Hispanic millennials said saving for retirement was a high priority.
For many Latinos, there are often cultural norms at play that cut into our cash flow and inhibit the ability to save; traditionally caring for children even into adult years and eventually caring for our elderly parents—with you also possibly believing your children will be responsible for your care in retirement. In addition, many in the Hispanic community believe that financial institutions can't be trusted and it's better to store money instead of investing it.
Don't let these traditions and beliefs stop you from growing your wealth. La familia is always going to be important but also consider your future and how much more you will be able to help your family if you are financially secure.
Here are a five tips to get started on the road to a comfortable retirement:
- Learn More. If you do not know about all of your options for retirement savings, read as much as possible about the topic. There are many resources you can access including articles about budgeting, saving, and more in our blog.
- Talk About It. Another survey mentions that 76% of Hispanics wish they'd learned more about managing money while growing up, and 72% wish they knew more about investing in stocks, bonds and mutual funds. Make sure you are sharing what you learn with your family, partner, compadres and children. You will be helping your community advance and achieve a better future as well as possibly gain knowledge yourself from your network.
- ¡Vámonos! It's never too late to get going and start putting some money away. Your money will start to accumulate assets and investing over a long period of time can have a great impact. What works the best to ensure you are saving is to set up an account and have payments automatically deposited on a regular basis.
- Invest in a 401K. If your company offers a 401K plan, make sure to invest enough to receive the match. The match is free money so you don't want to miss out. If you do not have access to a company 401K, open an individual retirement account. There are two options: a traditional or Roth IRA. You can find more information about IRA's through your bank or a financial advisor.
- Take Advantage of Technology. There are many new and easier ways today to get help saving and investing. As an example, a company was launched this year by a Latino, Carlos Garcia, called Finhabits, which is an online and mobile app platform that offers individual investment accounts as well as Roth IRAs. Their platform was designed to make investing easier and more attainable. Users can invest as little as $5 per week and the website is in English and Spanish.
While it is challenging to save money for tomorrow, when you need it today—there is information and resources available to help you better manage your budget and get you started on your retirement account.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.