By Catherine Singley Harvey, Manager, Economic Policy Project
As the Baby Boomer generation ages, we hear a lot about the looming retirement savings crisis: more than half of all working-age Americans are unprepared for a financially secure retirement. Fortunately, it’s not too late to turn the tide. Enhancing the retirement readiness of Latinos, who represent a young and growing portion of the American workforce, is critical to improving the retirement outlook for the nation.
NCLR’s new report, Enhancing Latino Retirement Readiness in California, finds that an emerging policy in California could reach more than seven million people who currently miss out on the benefits of saving for retirement at work simply because their employers do not offer a retirement plan. Latinos account for 3.8 million workers in this pool, the largest portion of Californians who could benefit from the new policy, called the California Secure Choice Retirement Savings Program. Access to a workplace-based plan is the biggest barrier to retirement savings for Latinos in California and nationwide.
At a press conference earlier today in Los Angeles, leading experts from NCLR, Prudential, and NEW Economics for Women, a nonprofit community development corporation in Los Angeles and an NCLR Affiliate, discussed the barriers that Latinos face in saving for retirement. They also addressed ways that policy and private industry can offer solutions to improve Latinos’ retirement readiness.
NCLR Vice President Delia de la Vara stressed that California’s approach, if it succeeds in reaching Latinos, could serve as model for the nation. Passed into law in 2012, California Secure Choice would provide individual retirement accounts (IRAs) for workers whose employers do not offer a retirement plan. Analysis from NCLR’s report highlights important features that could convert Latino workers into savers, including automatic payroll contributions, the ability to keep the account when an employee changes jobs, and the plan’s wide reach—workers at companies with just five or more employees would be automatically enrolled in the plan.
Still, all panelists emphasized that Secure Choice alone won’t be enough. As NCLR’s report notes, there are a number of policy solutions that could help all working-age Americans better prepare for retirement, including:
- Establishing a refundable tax credit for low-income savers
- Raising the minimum wage to an amount that will keep up with the rising cost of living
- Investing in nonprofit community-based organizations that provide financial coaching to help underserved families set goals and build savings and credit
To learn more about how to help Latinos save retirement, read the full version of Enhancing Latino Retirement Readiness in California.