Co-authored by M. Cindy Hounsell, President of the Women's Institute for a Secure Retirement
While Latinas have among the highest average life expectancy, the statistics seem grim for their retirement years. Latinas still only earn 54¢ for every $1 earned by a white male. October 15, 2015, is Latina Equal Pay Day -- the day in which Latinas catch up to what their white male counterparts made in 2014, almost two full years to earn equal pay. The loss of several hundreds of thousands of dollars over the course of a lifetime puts Latinas at an immediate disadvantage for retirement saving. Currently, only 37% of Latinas have set up an IRA, meaning that many have not been able to start saving for retirement. This explains why 80% of Latinas rely on Social Security benefits for the majority of their retirement income. As most people know, Social Security provides only enough income to pay for the bare basics - hardly enough to live comfortably.
There is, however, another threat to Latinas in addition to increased longevity, lower pay and lack of access to workplace retirement savings plans. Latinas far outpace other demographic groups in depleting their retirement savings by cashing out before retirement. This is especially costly as they tend to switch jobs more frequently and more often than not choose to spend the money, rather than continue to save. These statistics are not meant to scare young Latinas, but to help them understand the realities and provide a context for why they need to start planning early. All these factors help explain why 20% of Latinas over the age of 65 live in poverty.
As we celebrate another Hispanic Heritage Month, we want to look toward the future for Latinas. Our interest in educating women across the country is to help them see that the America Dream can include a secure retirement, if they are able to gain access to retirement plans at work and make the commitment to themselves and to their future. For more than 18 years, the Women's Institute for a Secure Retirement and MANA, A National Latina Organization, have partnered on critical community education workshops designed to teach Latinas about the vital importance of financial literacy, particularly as it relates to retirement. We have been able to train a committed network of volunteers to conduct financial workshops around the country and engage Latinas to discover the importance of gaining knowledge about the various financial systems that will affect their retirement security.
What steps can you take now?
1. Know your starting point. Try to eliminate debt, especially credit card debt. Use a retirement calculator to figure out how much income you will need for the future. Visit: Taking the Mystery out of Retirement at the Department of Labor.
2. Calculate your Social Security benefits. Since Social Security will represent a significant portion of most women's future income, create a My Social Security Account to get a free estimate of your potential benefits based on your earnings.
3. Check in on your employer retirement plan. Find out if your employer offers a pension plan or a 401(k). Take full advantage of any benefit your employer offers! If not, consider setting up an IRA account or a myRA.gov savings account for yourself. Either way, make the commitment to contribute a portion of your salary to a retirement plan and your future.
4. Seek out a financial advisor. It is very important to get good professional advice from a certified financial planner. These services aren't just for "rich" people. Let someone help you take a realistic look at what you need to do to prepare for your retirement.
5. Share this information with others. Many people rely on the advice of friends and family. As you begin to make difficult choices about savings and long-term goals, let a close friend or family member help motivate you in a positive way to follow through with your plans. And encourage others to do the same. Start today!
It is never too early - or too late - to take control of your financial future. We truly believe el que educa a una mujer, educa a una familia - he who educates a woman, educates a family. Together, we can educate women and families across the country to move the needle for Latinas to not only achieve the American Dream, but to extend that into a long and happy life, free of financial anxiety.