More than 90% of small business workers in the five top Hispanic metro areas of the United States do not have access to employer-sponsored retirement savings accounts, according to the study published by Finhabits: 2017 Latino Small Business Workers Lack Retirement Savings. The study found a significant ethnic gap. In addition, states with the largest concentration of Hispanic residents had the lowest participation in retirement savings. Texas, Arizona, New Mexico and Florida are among the states with the lowest participation rate (under 25 percent) overall.
The 2017 Latino Small Business Workers Lack Retirement Savings study takes a comprehensive bottoms up look at employer and employee retirement health in the U.S. small businesses segment, representing 37,563,000 full-time, private sector workers - 1/3 of the U.S. workforce, and 5,486,000 businesses with fewer than 100 employees.
"We have a retirement savings problem in the U.S. and the data clearly shows a wealth savings gap with Hispanics working at small businesses," said Carlos Garcia, the founder and CEO of Finhabits. "Our analysis found a moderate and troubling correlation between retirement savings and the Hispanic population of a city. This will have a long-term impact on the quality of life and the economy. We need more aggressive retirement education aimed at the Hispanic community and need to leverage technology to enable them to invest in their future easily even when they do not have access to 401(k)s."
Key Findings of the 2017 Latino Small Business Workers Lack Retirement Savings Study
- 401(k)s are not readily available for small business employees – The study found in the five most Hispanic metro areas only an average of 4 percent of companies with less than 100 employees offered a 401(k). Even in the least Hispanic areas, access was only 11 percent.
- Southern states are the worst for small business employee retirement savings – Arizona, New Mexico, Florida, and Texas all have Hispanic population levels above 20 percent and are among the states where employees, (1) have less access to a plan through their employer and (2) are also least likely to be saving for retirement.
- Hispanic Retirement Savings Gap – The study found that cities with a higher Hispanic population have a lower number of employees saving for retirement. Tellingly, the metro areas with the largest Hispanic populations average less than one third of employees saving for retirement compared to the five metro areas with the smallest Hispanic populations (11 percent vs. 35 percent).
- Connecticut is the best state for small business employee retirement savings – Finhabits found that 41.9 percent of small business employees in Connecticut had a retirement plan.
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