Cultural influences may impact how U.S. Hispanics approach retirement
The U.S Hispanic population has relatively low exposure to modern-day retirement or saving strategies, mostly because these are foreign concepts not offered in their countries of origin, or they have not yet reached retirement age.
In addition to the above statement, here are some cultural influences to keep in mind when interacting with U.S Hispanics:
Factoring family: No matter the race or ethnicity, family is a primary influence when it comes to retirement decision-making but may be even stronger for U.S. Hispanics. In their country of origin there may be no reliance on financial institutions or employers for assistance. The concept of “family takes care of family,” the young take care of the old, or those with jobs take care of those without, are major themes to consider when discussing retirement readiness in the U.S. Hispanic population.
Absence of financial literacy, but not financial discipline: For many foreign-born Hispanics that have lived in the U.S for less than 14 years, most likely, key financial concepts may still be relatively new to them. Yet, this segment may not fully appreciate the important role of retirement products to their financial well-being or the value of investing in stock, bonds, or mutual funds, but they are very familiar with the concept of budgeting. In fact, for U.S Hispanics, part of their savings is used to help family back home as well as their family in the U.S. Not surprisingly, Hispanics save using traditional banks because they are conservative and easy to liquidate.
Distrust of politicians and institutions: A skepticism toward institutions in general helps explain the conservative approach used by many U.S. Hispanics — they’d rather invest or save in cash or near-cash instruments. This wariness is a common reason why some foreign-born Hispanics left their countries of origin, and the high level of distrust on the regulatory entities is reflected in their perception with banks here in the U.S. The stance toward politicians and financial institutions may extend to concern for their employer’s solvency or integrity.
Plans to retire in their native country: Retirement planning for some U.S Hispanic involves moving back home. For others, it is being able to live in the U.S. while continuing to support their family back home. Some are worried about where retirement funds in a 401(k), IRAs, or other saving vehicles would go during a benefit event, such as death or relocation to another country. If these concerns are left unexplained or without alternative solutions, financial professionals may be missing out on a huge opportunity to help this market make informed decisions about their retirement plans.
As the multicultural landscape of U.S companies changes to reflect the growing percentage of Hispanics entering the labor market, it is important to address this segment’s low exposure to retirement vehicles helping as they near retirement. There are 62.1 million Hispanics in the U.S. so doing business with them could bring you remarkable success.